Canadian Stocks Rise as Inflation Slows, TD Buys U.S. Lender

Canadian stocks rose as a $6.3 billion purchase by Toronto-Dominion Bank and better-than- forecast retail sales and inflation reports boosted confidence a growing economy will spur mergers and acquisitions.

TD climbed 3.7 percent after agreeing to buy Chrysler Financial Corp., following a $4.1 billion acquisition by Bank of Montreal last week and a $1.04 billion asset sale by Talisman Energy Inc. yesterday. Ivanhoe Energy Inc. soared 11 percent after a natural gas discovery in China. Potash Corp. of Saskatchewan Inc., the target of an unsuccessful bid by BHP Billiton Ltd. earlier this year, advanced 2.7 percent as an industry report forecast record fertilizer use.

The Standard & Poor’s/TSX Composite Index rose 171.87 points, or 1.3 percent, to 13,365.15 at 4 p.m. in Toronto. That’s the most since Dec. 1. So far in December, the gauge has advanced 3.2 percent, heading for a sixth-straight monthly gain.

“We see more and more M&A activity, and that says the market is returning to growth,” said Luc Girard, who helps manage C$18 billion ($17.7 billion) as director of the portfolio advisory group at Desjardins Securities in Montreal. “People have a more bullish stance on the economy. It’s all positive for the economy and stocks.”

The Canadian benchmark gained 14 percent this year, led by raw-materials companies, as gold and copper each jumped at least 25 percent.

Inflation Slows

Consumer prices increased 2 percent in November from a year earlier, Statistics Canada said. Economists had forecast inflation of 2.2 percent, according to the median of 22 estimates in a Bloomberg survey. Core inflation, which excludes eight volatile items, advanced at the slowest pace since March 2008.

Retail sales climbed 0.8 percent in October over the previous month, the biggest jump since March, Statistics Canada said. The reported number exceeded 18 of 21 economist forecasts.

S&P/TSX financial stocks rose for the first time in six days for their biggest daily rally since Dec. 1.

TD led today’s advance in financial stocks, gaining 3.7 percent to C$73.16, erasing yesterday’s 2.3 percent loss. The bank said it doesn’t intend to issue stock to pay for the Farmington Hills, Michigan-based lender. Royal Bank of Canada, the country’s largest bank, advanced 2.1 percent to C$51.82. Bank of Montreal, which announced the purchase of Milwaukee- based Marshall & Ilsley Corp. on Dec. 17, increased 2.1 percent to C$57.78.

Ivanhoe Energy, which is also developing an oil sands project, surged 11 percent to C$2.88 after saying it made a “significant natural gas discovery” at its Zitong Block in China. Today’s gain marked the biggest since Oct. 29 and the highest price since May 10.

Energy Stocks

Other oil and gas producers advanced as crude futures climbed on forecasts for economic growth in the U.S. Cenovus Energy Inc., Canada’s fifth-largest energy company, increased 2.7 percent to C$32.78. Suncor Energy Inc., the country’s biggest oil and gas producer, rose 2.4 percent to C$37.52. Savanna Energy Services Corp. rose 5 percent to $7.14, the highest since March 22.

Talisman rose 1.1 percent to C$22.13 after climbing 4.8 percent yesterday on an agreement to sell a 50 percent stake in its Farrell Creek shale-gas assets to Sasol Ltd.

Potash, Agrium

Potash Corp. and Agrium Inc. gained after the International Fertilizer Industry Association said world fertilizer use will increase 4.7 percent in 2010-11 to a record.

Potash Corp. advanced 2.7 percent to C$144.70. Agrium, Canada’s second-largest fertilizer producer, climbed 3.2 percent to C$85.67.

Producers of base metals gained as copper advanced to a record after China reported refined-copper imports surged 37 percent in November from October. Chile’s Collahuasi mine, the world’s third-largest copper mine, declared force majeure after an accident shut its port.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, rallied 2 percent to C$58.68. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, increased 1.5 percent to C$110.50. Inmet Mining Corp., which produces copper, zinc and gold, climbed 1.4 percent to C$75.81.

To contact the reporters on this story; Matt Walcoff in Toronto at mwalcoff1@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.

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

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