Aug. 2 (Bloomberg) -- Canadian stocks had their biggest gain in two weeks after Canadian Natural Resources Ltd. and Barrick Gold Corp. reported higher-than-expected earnings and oil prices approached a record high.

Toronto-Dominion Bank paced gains among bank shares after BCE Inc. Chief Executive Officer Michael Sabia said he's not concerned about financing for the sale of Canada's biggest phone company in the largest-ever leveraged buyout, even as investors flee corporate debt because of rising U.S. mortgage defaults.

``Earnings growth remains strong. Profits on average are still well above consensus'' forecasts, Avery Shenfeld, senior economist at CIBC World Markets Inc. in Toronto, said. ``There are legitimate concerns about mortgage defaults and the leveraged buyout craze, but the flight to safety, in terms of Canadian equities, has been overdone. We're still bullish on oil.''

The Standard & Poor's/TSX Composite Index gained 158.88, or 1.2 percent, to 13,813.62 at 4 p.m. in Toronto, the largest advance since July 18. The index rebounded from a 1.5 percent loss yesterday on concern banks' profits may be hurt by credit market problems. It's still 5.5 percent below its July 19 record.

Canadian Natural Resources led energy shares higher. The country's second-largest natural-gas producer earned C$1.10 a share excluding one-time items in the second quarter. That exceeded by 7 cents the average of 10 analysts compiled by Bloomberg. The shares gained C$1.90 to C$73.

Larger rival EnCana Corp. climbed C$1.24 to C$66.24.

Crude oil for September delivery rose 0.4 percent to $76.83 a barrel at the 2:30 p.m. close of floor trading in New York, after falling yesterday from a record $78.77.

Barrick Gold climbed 27 cents to C$34.84. The world's biggest bullion miner said that second-quarter profit, excluding hedge contracts, was 54 cents a share. That surpassed the average 42 cents expected by 16 analysts in a Bloomberg survey.

Potash Corp. of Saskatchewan Inc., the biggest fertilizer maker, added C$4.18 to C$88.33.

Financials Rebound

Shares of Toronto-Dominion gained for the first time in nine days, adding C$1.40, or 2.1 percent, to C$69.20. Canada's third- largest lender by assets is providing C$3.8 billion to BCE's buyers and plans to sell the loan in debt markets.

Ontario Teachers Pension Plan is leading a group of investors that agreed in June to buy BCE, Canada's biggest phone company, for C$51.7 billion ($49.1 billion) including debt. BCE's Sabia said on a conference call that the financing package arranged by Teachers' is ``of very high quality.''

A measure of financial shares gained 1.7 percent and contributed the most among 10 industry groups to the S&P/TSX's advance. It's down 7.1 percent from a record on May 17. That month, five of the nation's big-six banks reported better-than- expected quarterly earnings. The banks are scheduled to begin releasing second-quarter profit reports later this month.

Royal Bank of Canada, the nation's biggest bank, rose C$1.08 to C$54.85. Canadian Imperial Bank of Commerce, the fifth- largest, added 97 cents to C$91.44. Manulife Financial Corp., Canada's largest insurer, added 49 cents to C$39.56.

BCE Leads Telecom

BCE gained 59 cents to C$40.48, leading an index of phone shares 1.6 percent higher. The company's 42 percent increase in second-quarter profit yesterday exceeded analyst estimates. Telus Corp. added C$2.05, or 3.5 percent, to C$60.40. Canada's second-largest phone company reports profit tomorrow.

Telephone shares were also boosted after Manitoba Telecom Services Inc., the nation's third-biggest telephone operator increased its forecast for full-year 2007 earnings.

``We'll see some good profits,'' said Michael Sprung, who oversees about $50 million as president of Sprung & Co. Investment Counsel in Toronto. ``We may have intermittent rallies during this period. There are people trying to take advantage of the recent weakness.''

Nortel Networks Corp. dropped C$1.35, or 5.9 percent, to C$21.57 for the steepest drop in the S&P/TSX today. North America's biggest phone-gear maker posted a second-quarter loss of 7 cents a share on declining sales to phone companies. The average estimate of analysts in a Bloomberg survey was 9 cents a share, excluding some costs and gains. Sales decreased 7.8 percent to $2.56 billion, missing analysts' estimates of $2.8 billion, on average.

The following shares had unusual price changes.

Canaccord Capital Inc. (CCI CN) climbed C$1.08, or 5.5 percent, to C$20.78, the most since June 15, 2006. The brokerage yesterday appointed Paul Reynolds as chief executive officer, succeeding Peter Brown who will continue as chairman. Reynolds was appointed president in August 2006. Previously, he was president and chief operating officer at the company's U.K. unit.

Certicom Corp. (CIC CN) plunged 98 cents, or 29 percent, to C$2.42, for its worst drop since June 4, 2001. The maker of computer-security software said in a statement that revenue in the quarter ended July 31 of $3 million to $3.2 million was likely below ``market expectations,'' because of contract delays. Two analysts in a Bloomberg poll forecast average revenue of $5.44 million. Certicom will announce the results on Sept. 6.

CGI Group Inc. (GIB/A CN) gained 65 cents, or 6.1 percent, to C$11.40, the most in three months. Canada's biggest computer- services provider yesterday reported profit that exceeded analyst estimates and today announced an initiative to develop software with a unit of Avaya Inc. (AV US) CGI was rated ``sector outperform'' in new coverage by Haywood Securities analyst Ralph Garcea, who expects the shares to rise to C$15 within a year.

Inmet Mining Corp. (IMN CN) jumped C$5.87, or 6.7 percent, to C$93.57, the most in a month. The copper miner, whose profit fell short of analyst estimates, may be bought, said UBS AG analyst Tony Lesiak in a note yesterday. He raised his share- price forecast by C$3 to C$97, valuing Inmet at a 15 percent discount to the price that Teck Cominco is paying for arrival.

InterOil Corp. (IOL CN) rose for a second day, adding C$3.62, or 14 percent, to C$28.97. Shares of the energy company rose 14 percent yesterday after it said it will develop with partners a liquefied natural gas facility in Papua New Guinea.

Rally Energy Corp. (RAL CN) jumped 95 cents, or 15 percent, to C$7.31, the most since Feb. 23, 2006. The oil company agreed to be acquired by private equity firm Citadel Capital Co. for C$898 million, or C$7.30 a share.

SXC Health Solutions Corp. (SXC CN) dropped C$6.87, or 24 percent, to C$21.31 its biggest drop in more than 7 years. The provider of health-care software reported ``weak'' second-quarter earnings and lowered its forecast for full-year 2007 revenue and profits, according to a note from J.P. Morgan Securities Inc. analysts led by Michael Minchak.

Barrick Gold Corp. (ABX CN)
BCE Inc. (BCE CN)
Canadian Imperial Bank of Commerce (CM CN)
Canadian Natural Resources Ltd. (CNQ CN)
EnCana Corp. (ECA CN)
Manulife Financial Corp. (MFC CN)
Potash Corp. of Saskatchewan Inc. (POT CN)
Royal Bank of Canada (RY CN)
Toronto-Dominion Bank (TD CN)

CCI CN <Equity> CN CIC CN <Equity> CN GIB/A CN <Equity> CN IMN CN <Equity> CN IOL CN <Equity> CN RAL CN <Equity> CN SXC CN <Equity> CN WJA CN <Equity> CN

To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.

Last Updated: August 2, 2007 17:39 EDT