Bloomberg News

Canada Stocks Rise as Central Bank Holds Interest Rates Steady

March 06, 2013

Canadian stocks rose for a second day as the central bank said its interest-rate policy is likely to be unchanged for some time amid slowing growth in the world’s 11th-largest economy.

Trilogy Energy Corp. (TET) surged 9.3 percent as an analyst with Salman Partners Inc. raised the energy company’s stock rating. BlackBerry climbed 4.7 percent after its chief executive officer said the latest line of smartphones was luring customers from rivals. Canadian Pacific Railway Ltd. rose 1 percent as the company said it was ahead of schedule with a job-reduction plan.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 77.60 points, or 0.6 percent, to 12,813.64 at 12:30 p.m. in Toronto. The S&P/TSX has risen 3.1 percent this year.

“The rising market today is a combination of the follow- through from the strong markets of the past few days and the fact that interest rates appear to be unchanged for a period of time,” said Anish Chopra, managing director and fund manager with TD Asset Management Ltd., from Toronto. His firm oversees about C$204 billion ($198 billion).

The Bank of Canada kept the benchmark rate on overnight loans between commercial banks at 1 percent. It said inflation will “remain low in the near term” in an economy with “material excess capacity.”

Slower Growth

Statistics Canada said March 1 that output expanded at a 0.6 percent annualized pace in the fourth quarter, slower than Bank of Canada Governor Mark Carney’s 1 percent forecast from January. The 0.5 percent inflation rate seen in that month remains well below his 2 percent target.

“The Canadian economy isn’t growing as fast as the U.S.,” Chopra said. “So you’re seeing the implications of that in how the Bank of Canada is positioning its rates, that it could stay at 1 percent for quite a while.”

Global stocks rose to the highest in more than 4 1/2 years today, and the Dow Jones Industrial Average extended its record as a private report showed faster-than-forecast U.S. jobs growth.

Raw materials stocks contributed most to gains in the S&P/TSX, rising 2.4 percent as a group. Eight of 10 index groups advanced. Trading volume was 8.8 percent higher than the 30-day average at this time of the day.

Gold Advances

Barrick Gold Corp., the world’s largest gold producer, rose 2.3 percent to C$29.99. Goldcorp Inc. climbed 3.6 percent to C$34.07. Gold for April delivery rose 0.5 percent to $1,582.80 an ounce in New York, extending a two-day rally.

Trilogy Energy jumped C$2.43 to C$28.58, headed for its biggest percentage gain since August 2011. Gordon Currie, senior analyst with Salman Partners, changed his rating for the stock to buy from hold and said the company could afford to raise its dividend. “Trilogy has a relatively low dividend compared to peer group companies,” he said in a client note. Trilogy’s dividend yield is about 1.5 percent, compared with 3.2 percent for the S&P/TSX Energy Index.

BlackBerry, formerly known as Research In Motion Ltd., increased 60 Canadian cents to C$13.50 after CEO Thorsten Heins, in an interview with the Spanish newspaper Expansion, said he was “a little surprised” that the BlackBerry Z10 smartphone was attracting customers from other platforms.

“Operators are supporting us a lot because they want BlackBerry 10 to be an alternative to Samsung and Apple,” Heins said in an interview with the newspaper during the Mobile World Congress in Barcelona last week.

Canadian Pacific rose C$1.35 to C$130.77, putting it on track to close at an all-time high. Chief Executive Officer Hunter Harrison, speaking today at a transportation conference in New York, said the company has already cut more than 3,000 jobs and is ahead of its schedule to eliminate more than one- fifth of its workforce by 2016.

Torstar Corp. (TS/B), publisher of the Toronto Star newspaper, tumbled 9.2 percent to C$7.18 after reporting fourth-quarter adjusted earnings of 49 Canadian cents a share, short of the average estimate of 53 cents according to a Bloomberg survey of eight analysts.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net


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