Canada Stocks Advance as Metals Companies Gain; Valeant Slumps
Canadian stocks rose for a third day as precious-metal stocks gained on demand for a haven from European government debt concerns and uranium producers advanced after the nuclear fuel hit a two-year high.
Barrick Gold Corp., the world’s largest producer, increased 4.7 percent as the metal surpassed $1,400 an ounce for the first time. Cameco Corp., the world’s second-largest uranium producer, climbed 8.5 percent after boosting its production forecast. Valeant Pharmaceuticals International, Inc., Canada’s largest drug developer, fell 5 percent after reporting third-quarter revenue that trailed analyst estimates last week.
The Standard & Poor’s/TSX Composite Index rallied 127.37 points, or 1 percent, from a two-year high to 13,052.48.
“There could be some people questioning whether some more austerity is not solving the problem” in Europe, said Todd Johnson, who helps oversee C$230 million ($229 million) as a money manager at BCV Asset Management in Winnipeg, Manitoba. “You could see a safe haven trade: ‘I can’t trust currencies anymore; I’m going to own gold.’”
The S&P/TSX rose 2 percent last week, the most in two months, as the U.S. Federal Reserve announced a $600 billion plan of asset purchases. The index surged 17 percent in the four months ending Nov. 5, led by raw-materials producers, as the U.S. dollar slumped on concerns that Fed stimulus would increase the money supply and reduce the value of the greenback.
Olli Rehn, the European Union’s commissioner for economic and monetary affairs, is in Dublin today to discuss Ireland’s plan to cut spending and raise taxes to trim its deficit. The difference in yield, or spread, between Irish and German 10-year bonds climbed to 548 basis points today, from 362 basis points on Oct. 18.
The S&P/TSX Gold Index gained 3.3 percent today, extending its 2010 advance to 27 percent. Barrick increased 4.7 percent to a two-year high of C$51.48. NovaGold Resources Inc., which explores in Alaska and British Columbia, rose for an eighth day, soaring 10 percent to C$14.68. Silver reseller Silver Wheaton Corp. rallied 7.4 percent from a record to C$35.40 as the metal climbed at least 2.7 percent for the third-straight day.
Ventana Gold Corp., which owns the La Bodega gold project in Colombia, surged 15 percent to C$10.80 after forecasting average annual production of 347,000 ounces of gold equivalent for the mine’s first six years. Fronteer Gold Inc., which explores in Nevada, jumped 9.7 percent to a two-year high of C$9.42 after announcing drilling results from its Long Canyon project.
Uranium producers gained after TradeTech LLC said uranium prices advanced to their highest level since November 2008 last week.
Cameco, which raised its 2010 production estimate by 2.3 percent, jumped 8.5 percent, the most in 14 months, to C$35.98. Uranium One, in which Russia’s ARMZ is buying a controlling stake, climbed 2 percent to C$5.10, extending a record streak of gains to 12 days. Denison Mines Corp., which produces uranium in the U.S. and Canada, soared 12 percent to C$2.80.
Valeant fell 5 percent to $25.78, extending its three-day decline to 9 percent. Last week, Chief Executive Officer J. Michael Pearson said the financial performance of the former Biovail Corp. part of the company was “disappointing.” Biovail and Valeant merged in September.
Manulife Financial Corp., North America’s third-largest insurer, climbed for a fourth day, rallying 4.1 percent to C$15.40.
On Nov. 4, the company reported a smaller third-quarter loss than most analysts in a Bloomberg survey had estimated. Manulife shares have soared 22 percent since Nov. 2 after plunging 35 percent this year through then.
Baffinland Iron Mines Corp., which is developing iron ore deposits in northern Canada, jumped 17 percent to C$1.11 after saying ArcelorMittal made a friendly, all-cash takeover offer of C$1.10 a share. Baffinland had received an unsolicited bid of 80 cents a share from Iron Ore Holdings LP in September.
Lumber producer Canfor Corp. rose 5.8 percent to a two-year high of C$10.80. Shares of the Vancouver-based company have gained 15 percent since it reported third-quarter profit that topped six of eight analyst estimates on Oct. 28.
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