Canadian Stocks Advance for Third Day as Oil, Base Metals Gain

Canadian stocks rose for a third day as oil gained after a government report showed a decline in U.S. supplies and base metals advanced on speculation demand from China will increase.

Canadian Natural Resources Ltd. (CNQ), the country’s second- largest energy company by market value, gained 2.5 percent after a rating increase by Menno Hulshof, an analyst at Toronto- Dominion bank. Ivanhoe Mines Ltd., which has a copper and gold project in Mongolia with Rio Tinto Group, rose 7.2 percent as copper gained for a fifth day. BlackBerry maker Research In Motion Ltd. (RIM) rallied 3.8 percent after AllianceBernstein Holding LP removed its “underperform” rating.

The Standard & Poor’s/TSX Composite Index advanced 166.19 points, or 1.2 percent, to 13,607.25, erasing its loss for the year.

“Commodities have come down to the point where some are looking relatively cheap,” said Blair Falconer, who oversees C$800 million ($822 million) as a money manager at HSBC Securities (Canada) Inc. in Toronto. “Energy, for example, is looking a lot better than it did a short while ago.”

The index increased 0.5 percent this week through yesterday, narrowing its quarterly loss to 4.8 percent, as raw- materials companies climbed on rebounding copper, corn and wheat prices. The materials industry accounts for 21 percent of Canadian stocks by market value, according to Bloomberg data.

Crude futures rose 3.3 percent after the U.S. Energy Department said oil inventories fell last week. Most analysts in a Bloomberg survey had forecast an increase.

Suncor Rises

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, advanced 2.7 percent to C$39.56. Cenovus Energy Inc. (CVE), the country’s fifth-biggest energy company, increased 3.5 percent to C$33.88. ARC Resources Ltd., a western Canadian oil and gas producer, climbed 4.3 percent to C$25.09 after reporting first- quarter cash flow that beat the average analyst estimate.

Canadian Natural gained 2.5 percent to C$40.74 after Hulshof raised his rating on the stock to “action list buy” from “buy.” In a note to clients, Hulshof cited the company’s growing oil-sands resources and forecasts of higher processing- equipment reliability.

Sterling Resources Ltd. (SLG), which explores for oil and gas in Europe, plunged 29 percent to C$1.78 after encountering wet sands in North Sea drilling. The shares have tumbled 54 percent since April 28, when the company declared force majeure on its Romanian offshore blocks due to trouble getting government permits.

Oilfield-services provider North American Energy Partners Inc. (NOA) sank 26 percent to C$7.39. The company said it will take a writedown of C$40 million to C$45 million due to the impact of inflation at the Horizon oil-sands project.

China Housing

Base-metals and coal producers gained after China’s statistics bureau said home prices advanced in 67 of 70 cities in April from last year. Copper demand from Chinese cable makers will more than double in the next 10 years, Dai Zhixiang, chairman and chief executive officer of Hu An Cable Holdings Ltd., said in an interview.

Ivanhoe Mines increased 7.2 percent to C$24.58. Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, climbed 4.2 percent to C$48.70. First Quantum Minerals Ltd. (FM), the country’s second-biggest publicly traded copper producer, rose 2 percent to C$135.

Nevsun Resources Ltd. (NSU), which produces gold in Eritrea, rallied 13 percent, the most in 11 months, to C$5.87 after saying it will begin paying dividends.

Jaguar Mining Inc. (JAG), which mines gold in Brazil, soared 23 percent, the most since October 2008, to C$5.14 after its first- quarter earnings beat the average analyst estimate.

Wet Weather

Fertilizer producers climbed as wet weather delayed corn and wheat planting in the U.S. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, rose 2.3 percent to C$53.49. Agrium Inc. (AGU) gained 2.1 percent to C$79.67.

RIM advanced for a second day after falling to a four-year low May 16, rallying 3.8 percent to C$44.11. Pierre Ferragu, a Bernstein analyst, raised his rating on the shares to “market perform, telling clients in a note, ‘‘We do not see RIM’s situation deteriorating fast enough in the next 12 months to frighten the market beyond today’s negative sentiment.”

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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