Canadian Stocks Rise as Gold Gains on Italian Credit-Rating Cut

Canadian stocks rose for the first time in three days as gold companies advanced after Standard & Poor’s cut Italy’s credit rating and financial companies gained on speculation the U.S. will begin a new stimulus strategy.

Goldcorp Inc. (G), the world’s second-largest producer by market value, climbed 5.2 percent as the metal rose. Royal Bank of Canada (RY), Canada’s biggest lender by assets, increased 0.8 percent as the U.S. Federal Open Market Committee began a two- day meeting in Washington. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, fell 3.1 percent after an analyst at Dahlman Rose & Co. said the U.S. is more likely to repeal ethanol mandates.

The Standard & Poor’s/TSX Composite Index gained 37.84 points, or 0.3 percent, to 12,209.88.

“There’s speculation the Federal Reserve as they meet today and tomorrow will do something more on the monetary front,” Murray Leith, a money manager at Odlum Brown Ltd. in Vancouver, said in a telephone interview. The firm oversees about C$7.5 billion ($7.6 billion). “With the stress in Europe still there, that’s the backdrop the gold bulls like.”

Canada’s stock benchmark has retreated 4.4 percent this month as energy and financial stocks have fallen on concern the European debt crisis will jeopardize the global economic recovery. The S&P/TSX is set to drop for a seventh straight month, the longest streak since 1984.

Gold stocks climbed after S&P reduced Italy’s credit rating to A from A+, citing weak economic growth, a “fragile” government and rising borrowing costs. The metal rallied 1.7 percent after dropping 2 percent yesterday.

Precious Metal

Goldcorp increased 5.2 percent to C$52.62. Yamana Gold Inc. (YRI), Canada’s fourth-largest gold company by market value, surged 5.6 percent to C$16.68. Iamgold Corp. (IMG), which operates in West Africa, South America and Quebec, jumped 5.5 percent to a record C$23.17.

Romarco Minerals Inc. (R), which is developing a gold mine in South Carolina, soared 12 percent to C$1.16 after saying the U.S. Army Corps of Engineers will hold a hearing on the mine’s environmental-impact statement next month. The shares had closed at a two-year low yesterday.

The Fed will decide to replace short-term Treasuries in its portfolio with long-term bonds to try to further reduce bond yields, 71 percent of economists in a Bloomberg survey said. The central bank’s Federal Open Market Committee is to issue a statement on its plans tomorrow.

Royal Bank advanced 0.8 percent to C$46.95. Insurer Fairfax Financial Holdings, climbed 3.1 percent to C$385. Great-West Lifeco Inc. (GWO), Canada’s second-largest insurer, increased 1.1 percent to C$20.66.

Potash Corp. fell 3.1 percent to C$51.72 after Charles Neivert, an analyst at Dahlman Rose, said the corn-price level needed to spur the U.S. to eliminate laws that require ethanol in gasoline may be lower than previously thought. Livestock farmers are concerned the ethanol mandate is pushing up corn prices, Neivert wrote in a note to clients.

Forecast Cut

An index of base-metals and coal producers closed at a one- year low as copper dropped after closing at the lowest since November yesterday. Industrial metals declined after the International Monetary Fund cut its growth forecast for the U.S.

Teck Resources Ltd. (TCK/B), Canada’s largest company in the industry, lost 4.2 percent to C$36.11. First Quantum Minerals Ltd. (FM), the country’s second-biggest publicly traded copper producer, decreased 7.6 percent to C$17.94, extending its two- day plunge to 15 percent, the most since 2008. Capstone Mining Corp. (CS), which produces base metals in Mexico and Canada, sank 6.3 percent to C$2.54.

Exploration Orbite VSPA Inc. (ORT/A), which is developing an alumina project in Quebec and extraction technology, soared 22 percent from a seven-month low to C$2.17 a day after filing a prospectus for a share offering. Had it not done so by today, it would have had to issue more equity, diluting the stakes of existing shareholders, Frederic Berard, a company spokesman, said in an e-mail message.

BlackBerry maker Research In Motion Ltd. (RIM) fell 3.6 percent to C$22.60 after Mike Abramsky, an analyst at Royal Bank, cut his price estimate on the company’s U.S.-traded shares to $29 from $35. RIM must improve its products, marketing, governance and credibility with investors, Abramsky said in a note to clients.

Directory publisher Yellow Media Inc. plunged 18 percent to 55 Canadian cents, a record low. Shares of the Verdun, Quebec- based company have tumbled 91 percent this year on concern the company will be unable to regain profitability as fewer people use printed phone books.

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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