Canada Stocks Rise as Fertilizer, Oil Producers Advance on Growth Outlook

Canadian stocks rose for a third day as fertilizer producers gained with surging prices for agricultural commodities and oil advanced after the International Monetary Fund raised world growth forecasts.

Potash Corp. of Saskatchewan, the world’s biggest fertilizer producer, increased 3.6 percent as corn rose to the highest price in almost six months. Canadian Natural Resources Ltd., Canada’s second-largest energy company by market value, climbed 2.4 percent after U.S. initial jobless claims dropped more than expected. Barrick Gold Corp., the world’s largest producer, declined 3.4 percent as the euro climbed to an eight- week high against the U.S. dollar.

The Standard & Poor’s/TSX Composite Index rallied 36.1 points, or 0.3 percent, to 11,433.37. The S&P/TSX jumped 2.8 percent over the previous two days, the most in two days since Feb. 2, after sinking to an eight-month low.

“People are actually saying things are not that bad,” said Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, which manages about C$1.6 billion ($1.53 billion). “Maybe the job numbers will continue to improve; corporate profits are still doing pretty well. We don’t need to be that afraid anymore.”

The S&P/TSX has lost 2.7 percent this year, compared with 4 percent for the S&P 500, as a 3.8 percent increase in S&P/TSX gold stocks has moderated the Canadian benchmark’s slump.

Potash, Agrium

Potash Corp. and Agrium Inc. advanced with corn and wheat prices, which have surged 15 and 20 percent, respectively since June 29 amid worldwide weather conditions inhibiting crop yields. A U.S. government report on world agricultural supply and demand is scheduled to be released tomorrow.

Potash Corp. increased 3.6 percent to C$94.18. Agrium, Canada’s second-largest fertilizer producer, climbed 6.7 percent to C$57.64.

The IMF today raised its forecast for 2010 word economic growth to 4.6 percent from 4.2 percent. The organization raised its estimate for Canada to 3.6 percent from 3.1 percent.

First-time unemployment claims in the U.S. declined to 454,000 last week from 475,000 the week before, the Labor Department said today in Washington. Economists had forecast applications would total 460,000, according to the median estimate in a Bloomberg survey.

Crude oil futures gained after the releases, rising 1.9 percent from yesterday’s settlement price to $75.44 a barrel.

Canadian Natural, Suncor

Canadian Natural advanced 2.4 percent to C$36.69. Suncor Energy Inc., the country’s biggest oil and gas company, increased 1.2 percent to C$32.88. Cenovus Energy Inc., the oil company spun off from EnCana Corp. in December, climbed 1.6 percent to C$29.

The S&P/TSX Banks Index rose for a third day after TD analyst Jason Bilodeau said recent share-price drops in the industry present an opportunity for investors.

Royal Bank, Canadian Imperial Bank of Commerce and National Bank of Canada each gained after Bilodeau upgraded their shares to “buy” from “hold.” Royal Bank advanced 1.2 percent to C$53.08. CIBC, Canada’s fifth-largest bank, increased 0.7 percent to C$66.88. National Bank, the No. 6 bank in Canada by assets, climbed 1 percent to C$57.03.

Gold fell as much as 1 percent before closing down 0.2 percent at $1,196.10 an ounce. Futures dropped as European Central Bank President Jean-Claude Trichet signaled the economic recovery on the continent is gaining momentum. The euro gained against the U.S. dollar, British pound and Swiss franc.

Market Drag

The index of 29 S&P/TSX gold companies tumbled to its lowest level since April 27. Barrick decreased 3.4 percent to C$44.41. Goldcorp Inc., Canada’s second-largest gold producer, declined 2.4 percent to C$42.30. Eldorado Gold Corp., which mines in Turkey and China, slumped 1.9 percent to C$17.18.

Kirkland Lake Gold Inc., which explores for the metal in Canada, sank 9.6 percent, the most in 10 months, to C$7.77 after announcing a loss of 3 cents a share for the fourth quarter. The average estimate among four analysts in a Bloomberg survey was for a 1-cent-a-share profit.

Wireless equipment maker DragonWave Inc. plunged 15 percent to C$4.95, the lowest price in almost a year, after it forecast second-quarter revenue of about $25 million, missing the average analyst estimate of $46.8 million. DundeeWealth Inc. and GMP Capital Inc. reduced their ratings on DragonWave shares.

Forsys Metals Inc., which is developing a uranium mine in Namibia, tumbled 16 percent to a 10-year low of C$1.53, bringing its weekly decline to 31 percent.

The company said yesterday it hasn’t found a buyer after completing its review of strategic alternatives. Discussions with potential bidders continue, the company said. Analyst Patrick Donnelly of Salman Partners Inc. reduced his rating on the shares to “hold” from “buy” today.

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

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