Canada Stocks Gain a Second Day as Canadian Natural Rises; Barrick Drops

Canadian stocks rose for a second day as energy futures surged on U.S. government inventory reports and demand for alternatives to oil produced through offshore drilling.

Canadian Natural Resources Ltd. rose 2.9 percent as natural gas climbed to the highest price in three months. Barrick Gold Corp., the world’s largest gold-mining company, dropped 1.6 percent as the U.S. currency rallied following reports showing expansion in the nation’s service industries and a decline in jobless claims. Teck Resources Ltd., Canada’s largest base- metals producer, lost 2.6 percent after the chiefs of the world’s two biggest copper-mining companies said business may suffer from China’s efforts to cool its economy.

The Standard & Poor’s/TSX Composite Index rose 31.20 points, or 0.3 percent, to 11,811.87 at 4:10 p.m. in Toronto. The measure has rebounded 3.6 percent since May 20, led by energy companies. Oil has gained 9.6 percent and natural gas 14 percent during that period.

The BP Plc oil spill in the Gulf of Mexico “is really going to affect the future of offshore drilling,” said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, which manages about C$1.6 billion ($1.54 billion). “Alternatives are definitely being considered a lot more than the offshore guys.”

Denying a Report

Oil and natural gas rallied today after the U.S. Energy Department reported an unexpected drop in crude inventories and a smaller-than-forecast gain in natural-gas supplies. The fuels increased further after the Washington Post reported the U.S. had extended a Gulf of Mexico offshore drilling moratorium to shallow waters, citing an e-mail message from a government official to a company. The U.S. Interior Department later told the newspaper there has not been such a policy change.

Natural gas jumped 6 percent, the most since Jan. 6, to $4.69 per British thermal units. Oil rose 2.4 percent to $74.61 a barrel.

Canadian Natural increased 2.9 percent to C$37.76 after Collins Stewart Plc analyst Katherine Lucas Minyard raised her rating on the company to “buy” from “hold.” Minyard cited the prospect of a narrower gap between the prices of heavy and light crude.

Canadian Oil Sands Trust, the largest owner of the Syncrude project, climbed 1.6 percent to C$28.40. EnCana Corp., Canada’s largest natural gas producer, increased 3.1 percent to C$34.94. Enbridge Inc., Canada’s largest pipeline company, rallied 2.3 percent to C$49.06.

Euro, Yen

S&P/TSX gold companies fell for the first time this week as the U.S. dollar gained against the euro, yen, Canadian dollar and British pound, leading to lower prices for the precious metal.

The U.S. currency gained after the Institute for Supply Management’s index of non-manufacturing businesses in the U.S. held at 55.4 for a third month. Readings above 50 signal expansion. Also, first-time unemployment claims decreased by 10,000 to 453,000 last week, the U.S. Labor Department said.

Barrick dropped 1.6 percent to C$44.09. Kinross Gold Corp., Canada’s third-largest producer of the metal, declined 1.3 percent to C$17.87. Goldcorp Inc., the No. 2 producer by revenue, slumped 2.2 percent to C$44.89.

Copper retreated for a fourth day after chief executive officers of Freeport-McMoRan Copper & Gold Inc. and Codelco said China’s plans to restrain its economy threaten to reduce demand for industrial metals.

Steel Mills

Teck, which also sells coal for use in Chinese steel mills, lost 2.6 percent to C$35.12. Demand for the fuel will be slowed by the Chinese government’s measures to cool the property market, Wu Chenghou, a senior adviser to the China Coal Transport and Distribution Association, said at an industry conference in Shanghai today.

Copper producer Quadra FNX Mining Ltd. slumped 5.3 percent to C$12.87. HudBay Minerals, which mines copper and zinc in Canada, retreated 3.7 percent to C$11.50.

Canadian Pacific Railway Ltd., the country’s second-largest railroad, advanced 2.5 percent to C$59.62 a day after the company’s meeting with investors in Calgary. CP Chief Executive Officer Fred Green said the company expects to reduce expenses as a percentage of revenue.

“If successful, we forecast the upside to earnings could be substantial,” Royal Bank of Canada analyst Walter Spracklin told clients in a note.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

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