Canadian Stocks Rise After U.S. Reports Drop in Jobless Claims

Canadian stocks rose, completing the biggest three-day climb since the beginning of the bull market, as energy and financial shares advanced after the U.S. reported a decline in initial jobless claims.

Encana Corp. (ECA), Canada’s biggest natural gas producer, gained 5.2 percent after U.S. supplies of the fuel increased less than analysts had estimated. Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, rallied 4.6 percent after reporting second-quarter net income that surpassed the average analyst estimate. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, advanced 5.6 percent after the U.S. cut its corn-crop forecast.

The Standard & Poor’s/TSX Composite Index climbed 340.91 points, or 2.8 percent, to 12,539.80 after the U.S. said first- time unemployment claims slipped 1.7 percent to 395,000 last week. The index’s 7.4 percent three-day gain was the biggest since March 2009, when it rebounded from a five-year low.

“Slightly under 400,000 isn’t a good number, but it’s a relatively good number given what we’ve seen in the last few months,” Todd Johnson, a money manager at BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees about C$300 million ($303 million).

The S&P/TSX decreased 5.8 percent this month through yesterday, less than half the retreat of the S&P 500, as a surge in gold stocks partially offset the impact of S&P’s downgrade of the U.S. credit rating. The Canadian benchmark outperformed its U.S. peer by 5.2 percentage points yesterday, the most in a day since 1987, not including days after one of the markets was closed.

Encana, Cenovus

Natural gas futures rose the most since July 15 today after weekly U.S. inventories increased less than all 23 analysts in a Bloomberg survey had forecast. Crude oil gained 3.4 percent after surging 4.5 percent yesterday.

Encana advanced 5.2 percent to C$25.68. TransCanada Corp. (TRP), the owner of the country’s largest pipeline system, climbed 4.3 percent to C$40.94. Trilogy Energy Corp. (TET), a western Canadian natural gas producer, rallied 9.2 percent to C$26.35.

Oil-sands developer BlackPearl Resources Inc. (PXX) soared 24 percent, the most since May 2009, to C$5.46 after analysts at Toronto-Dominion Bank, Royal Bank of Canada, Macquarie Group Ltd. and Bank of Nova Scotia (BNS) raised their ratings on the stock. In a note to clients, William S. Lee, the analyst at Scotiabank, cited the stock’s 48 percent decline from Feb. 15 to yesterday.

Provident Energy Ltd., a natural gas services and marketing company, rallied 8.1 percent, the most since March 2009, to C$8.15 after reporting second-quarter adjusted funds from operations per share that surpassed the estimate of Patrick Kenny, an analyst at National Bank of Canada, by 50 percent.

Banks, Insurers

Forty of 43 financial companies rose. Royal Bank of Canada (RY), the country’s biggest lender by assets, gained 3.5 percent to C$51.41. Bank of Nova Scotia, Canada’s third-largest bank by assets, advanced 3.6 percent to C$53.77. Manulife increased 4.6 percent to C$13.08.

Fertilizer producers climbed after the U.S. said farmers will harvest smaller crops than forecast last month following a damaging heat wave. Potash Corp. rose 5.2 percent, the most in almost a year, to C$53,85. Agrium Inc. (AGU), which also retails agricultural products, gained 2.5 percent to C$81.96.

Base-metals and coal producers advanced as copper futures rallied the most since March. Quadra FNX Mining Ltd. (QUX), which operates in the U.S., Canada and Chile, climbed 9.4 percent to C$13.37. Lundin Mining Corp. (LUN), which produces base metals in Europe, jumped 10 percent to C$5.40. Grande Cache Coal Corp. (GCE) surged 13 percent to C$7.22.

Higher Costs

Kinross Gold Corp. (K), Canada’s third-biggest gold company, lost 5 percent to C$15.50 after Anita Soni, an analyst at Credit Suisse Group AG, cut her rating on the shares to “neutral” from “outperform.” In a note to clients, Soni cited higher cost forecasts for the company’s Tasiast project in West Africa.

Iamgold Corp. (IMG), which mines in West Africa, South America and Quebec, sank 7 percent to C$18.96 after missing analysts’ average earnings estimate for last quarter by 36 percent, excluding certain items.

Open Text Corp. (OTC), the country’s biggest software company, slumped 7.4 percent, the most since April 2010, to C$51.84 after its profit trailed the average analyst estimate in a Bloomberg survey.

New Smartphones

BlackBerry maker Research In Motion Ltd. jumped 8.1 percent to C$23.90. In a note dated yesterday, Mike Abramsky, a Royal Bank analyst, said the release of new phones this month “may offer a near-term earnings catalyst.” The shares plunged 62 percent this year through yesterday.

Imax Corp. (IMAX), the maker of giant-screen movie-projection systems, rebounded 10 percent to C$17.32 after falling 44 percent this year through yesterday.

To contact the reporter on this story: Matt Walcoff at Mwalcoff1@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

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