May 14 (Bloomberg) -- Canadian stocks rose for the first time in four days as financial shares climbed after a drop in borrowing costs and Gildan Activewear Inc. posted better-than- estimated results.

Royal Bank of Canada, Toronto-Dominion Bank and Sun Life Financial Inc. advanced more than 1.5 percent. Gildan, North America’s biggest T-shirt maker, surged a record 24 percent. Canadian Tire Corp., the country’s biggest auto-supplies retailer, jumped 6 percent after its quarterly profit beat analysts’ estimates by 6.1 percent.

The Standard & Poor’s/TSX Composite Index rose 139.69 points, or 1.4 percent, to 9,849.20 at 4:10 p.m. in Toronto. The stock benchmark is up 9.6 percent for 2009, beating the S&P 500, which increased 1 percent today.

“We’re on a bit of a run from the lows in March,” said John Kinsey, who helps manage about C$1 billion at Caldwell Securities Ltd. in Toronto. “It looks like we’re having a snapback from yesterday. This could go a long way to repairing the damage that was done yesterday.”

Even after today’s advance, the S&P/TSX has dropped 3.8 percent in the past four days on concern the 30 percent rally since March 9 has made Canadian stocks expensive. The index trades at 12.2 times earnings, near the highest valuation since October.

Yesterday, the S&P/TSX fell the most in two months, losing 3.7 percent, after a U.S. government report showed retail sales declined in April.

Home Sales

Canadian sales of existing homes rose the most in more than five years in April, a realtor group said, citing lower prices and a rebound in consumer confidence. Sales rose 11 percent from the previous month on a seasonally adjusted basis to 34,838 units, according to the Canadian Real Estate Association.

Royal Bank rose 2.6 percent to C$42.35. Toronto-Dominion climbed 1.5 percent to C$48.06. Sun Life added 2.9 percent to C$26.99. A measure of financial stocks in the S&P/TSX index increased 1.8 percent, the most among industries, following a 7.6 percent decline in the previous three days.

The London interbank offered rate, or Libor, a gauge of the cost to borrow in dollars for three months between banks, fell almost three basis points to 0.85 percent today, according to the British Bankers’ Association. It was the biggest drop in eight weeks. Gildan surged 24 percent, the most since going public in 1998, to C$15.65. North America’s biggest T-shirt maker posted second-quarter sales of $244.8 million, topping the average analyst estimate by 11 percent, according to Bloomberg data.

Retailer’s Profit

Canadian Tire climbed 6 percent to C$48.20. The retailer reported first-quarter income excluding some items of 61 cents a share. Analysts polled by Bloomberg estimated a 58-cent profit.

Over-the-counter derivatives should trade through exchanges to avert a “meltdown” and reduce risks to the financial system, the head of Canada’s main equities and derivatives market said.

“We were pretty close to a meltdown and I actually think listed marketplaces with multilateral clearing are part of the answer to that question,” TMX Group Inc. Chief Executive Officer Thomas Kloet said in an interview yesterday in New York.

ING Canada Inc. rose 1 percent to C$34.15. The country’s largest property and casualty insurer is looking for acquisitions and may consider purchases abroad, Chief Executive Officer Charles Brindamour said.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

Last Updated: May 14, 2009 16:34 EDT