Canadian Stocks Advance as Gold Producers Gain on U.K. Inflation

Canadian stocks rose for a second day as precious-metal futures gained after the U.K. reported its highest inflation rate since November 2008.

Barrick Gold Corp., the world’s largest gold producer, advanced 1.4 percent as the metal climbed to the highest level in almost four weeks. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, increased 0.7 percent after saying it plans to restart its fire- damaged oil-sands operations in the second quarter. Potash Corp. of Saskatchewan Inc. fell 3.3 percent as agricultural commodities retreated.

The Standard & Poor’s/TSX Composite Index rose 18.58 points, or 0.1 percent, to 13,929.35, the highest level since July 2008. The equity benchmark has gained 2.8 percent this month as gold bounced back after falling the most in 13 months in January.

“It has a binary role: It’s a metal to use in time of duress, but it’s also a metal to protect from excess, which is what we’ve got now,” said Bob Decker, who helps oversee C$5.5 billion ($5.6 billion) as a money manager at Aurion Capital Management in Toronto. “It seems to be back in the bull phase after a short and sharp correction.”

The precious metal has advanced this month on concern over inflation in emerging markets and Europe and the strife in the Middle East. U.K. consumer prices rose at an annual rate of 4 percent in January, twice the Bank of England’s inflation target, the Office for National Statistics said today in London.

Rate Issue

In a letter to George Osborne, the U.K.’s Chancellor of the Exchequer, central-bank Governor Mervyn King argued against raising interest rates, saying the excess inflation is “a temporary deviation.”

Chinese inflation excluding food increased the most in at least six years last month, the country’s statistics bureau said today.

Gold for April delivery advanced 0.7 percent to C$1,374.10 an ounce in New York. Silver climbed 0.5 percent.

Barrick rose 1.4 percent to C$48.66. Goldcorp Inc., the world’s second-largest gold producer by market value, gained 1.7 percent to C$43.56. Silver reseller Silver Wheaton Corp. advanced 4.1 percent to C$36.26. North American Palladium Ltd., which mines the precious metal in Ontario, jumped 5.6 percent to C$7.57 after reporting drilling results.

Pretium Resources Inc., which explores for gold in British Columbia, rallied for a 15th day, surging 12 percent to $10.85. In a press release, the company said it “is not aware of any material undisclosed development that would cause the upward movement” in the share price.

Pretium has soared 81 percent since its December initial public offering. In a Jan. 11 note, Adam P. Graf, an analyst at Dahlman Rose & Co. told clients, “The company offers high gold leverage, high gold grades, and a proven management team.”

Refinery Update

Canadian Natural increased 0.7 percent to C$44.68 after releasing an update on its Horizon mine and refinery, which have been idled since a Jan. 6 fire. George Toriola, an analyst at UBS AG, told clients in a note that the update is “positive” and will reduce concerns about the project.

Progress Energy Resources Corp., which produces natural gas in western Canada, dropped 6.9 percent, the most in 23 months, to C$13.17 after saying it will sell 14.4 million shares at C$13.90 a share. The company will also sell C$200 million ($203 million) in debt that can be converted into stock.

Manulife Rises

Manulife Financial Corp., North America’s fourth-largest insurer, climbed 2.4 percent to C$18.69 after rising 1.8 percent yesterday. Shares of the Toronto-based company had tumbled 6.5 percent over the prior three days as the company’s fourth- quarter profit trailed the average analyst forecast.

Fertilizer producers fell as wheat dropped the most since Nov. 16 on forecasts for rain in parts of China that have suffered drought. Also today, Yara International ASA, the world’s largest publicly traded maker of nitrogen fertilizer, reported fourth-quarter earnings that missed the average analyst estimate by 7.6 percent, excluding certain items.

Potash Corp. declined 3.3 percent from a 29-month high to C$60.63. Agrium Inc., Canada’s second-largest fertilizer producer, retreated for the first time in seven days, losing 2.9 percent to C$94.26.

Base-metals producers fell as copper dropped from a record price in New York.

Teck, Shaw

Teck Resources Ltd., Canada’s biggest base-metals and coal producer, declined 1.4 percent to C$58. First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, slumped 4.2 percent to C$128.15.

Shaw Communications Inc., Canada’s biggest cable and satellite television provider by subscribers, declined 2.2 percent to C$21.30 after Tim Casey, a Bank of Montreal analyst, reduced his rating on the shares to “market perform” from “outperform.”.

In a note to clients, Casey cited competition from Telus Corp., the country’s third-largest wireless carrier. Casey said he “is growing increasingly concerned with Shaw’s ability to withstand competitive pressures from Telus, specifically its OptikTV service.”

Casey had rated the Calgary-based company “outperform” since October 2008.

To contact the reporter 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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