Canadian Stocks Rise as China Holds Off on Interest Rate Boost

Dec. 13 (Bloomberg) -- Canadian stocks rose for a third day, led by oil and metal producers, as China refrained from boosting interest rates after reporting higher inflation than most economists forecast.

Suncor Energy Inc., Canada’s largest oil and gas producer, advanced 1.2 percent as crude oil climbed the most in eight days. Barrick Gold Corp., the world’s largest producer of the metal, gained 0.9 percent after China’s statistics bureau said consumer prices increased 5.1 percent in November from a year earlier. Precious-metals reseller Gold Wheaton Gold Corp. jumped 14 percent after agreeing to be purchased by Franco-Nevada Corp.

The Standard & Poor’s/TSX Composite Index rose 56.39 points, or 0.4 percent, to a 15-month high of 13,295.86.

“We got the relief that there was no China rate hike over the weekend -- which was rumored -- even with inflation being a little higher than people thought it was going to be,” said Greg Taylor, who helps oversee C$5 billion ($4.98 billion) as a money manager at Aurion Capital Management in Toronto. “We have a little of a window to year-end with no Chinese rate hikes. That’s got the commodities going.”

The index rallied 13 percent this year through Dec. 10, led by a 34 percent surge in shares of raw-materials companies. Copper gained 22 percent and oil 11 percent as industrial production in China increased 16 percent over last year through November 30.

Firms including UBS AG and Mizuho Securities Asia Ltd. had forecast the People’s Bank of China would raise interest rates over the weekend for the second time in two months. The central bank did extend a temporary 0.5-percentage-point increase in banks’ reserve requirements, two people briefed on the matter said today.

Energy Shares

Thirty-nine of 55 S&P/TSX energy companies gained after a Chinese report said refineries in the country ran at record rates last month. Crude oil for January delivery advanced 0.9 percent to $88.61 a barrel.

Suncor increased 1.2 percent to C$36.63. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, rose 2.4 percent to C$43.26 after Michael P. Dunn, an analyst at FirstEnergy Capital Corp., boosted his 12-month share-price estimate on the stock to C$50 from C$46. Oil-sands developer BlackPearl Resources Inc. gained 7.1 percent to a four-year high of C$6.

Gold futures gained 0.9 percent and silver 3.6 percent in New York as the U.S. dollar fell for the first time in six days against a basket of world currencies.

Mining Shares

Barrick advanced 0.9 percent to C$54.32. Silver reseller Silver Wheaton Corp. climbed 2 percent to C$39.65.

Gold Wheaton, spun off from FNX Mining Co. in 2008 to resell the precious-metal byproducts of FNX’s base-metals mining, soared 14 percent to C$4.99 after agreeing to be bought by Franco-Nevada Corp. for shares and cash. Gold Wheaton, which touched a 25-month high, valued the deal at C$830 million, or $5.20 a share.

Franco-Nevada, which owns gold, oil and gas royalties in North America, lost 3.8 percent to C$32.15. Quadra FNX Mining Ltd., the result of a May merger between FNX and Quadra Mining Ltd., rallied 5.9 percent to C$16.04 after agreeing to sell its 35 percent stake in Gold Wheaton for C$262.6 million.

Fronteer Gold Inc., which explores for gold in Nevada, jumped 7.3 percent to a three-year high of C$11.45 after reporting what it called “robust” drilling results.

Semafo Inc., which mines gold in Africa, sank 4.6 percent to C$11.75 to extend its five-day decline to 17 percent. The shares had tripled in a year before Dan Rollins, an analyst at UBS, began coverage of the company with a “neutral” rating, saying the company’s valuation might deter a potential takeover bid.

Cameco Corp., the world’s second-largest uranium producer, advanced 1.3 percent to C$39.15, extending a 16-month high. The volume of the nuclear fuel sold in the spot market this year hit a record last week due to demand from Asia, TradeTech LLC said.

Insurers Climb

Sun Life Financial Inc., Canada’s third-biggest insurer, climbed 2.2 percent to C$30.18. An index of S&P/TSX insurers has gained nine straight days, the longest streak since 2003, as bond yields have risen. Bank of Nova Scotia, the country’s third-largest bank, increased 1 percent to a record C$56.56 as the six biggest lenders rallied.

BlackBerry maker Research In Motion Ltd. dropped 2.3 percent to C$61.25 after Alexander Peterc, an analyst at Exane BNP Paribas, cut his rating on the stock to “neutral” from “outperform.” In a note to clients, Peterc cut his earnings estimate for the fourth quarter, citing a potential lack of new models before the release of the PlayBook tablet next year.

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

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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