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Canadian Stocks Advance After Europeans Reach Debt-Crisis Deal

Canadian stocks rose to a seven-week high as banks and commodity producers rallied after European leaders agreed to increase the size of their rescue fund and persuaded bondholders to take 50 percent losses on Greek debt.

Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, gained 4.9 percent as crude advanced. Teck Resources Ltd. (TCK/B), the country’s biggest base-metals and coal producer, rallied 8.1 percent as the metal headed for a record weekly increase. Manulife Financial Corp. (MFC), North America’s fourth-largest lender by assets, surged 7.1 percent as financial stocks rose.

The Standard & Poor’s/TSX Composite Index gained 279.38 points, or 2.3 percent, to 12,465.44, the highest close since Sept. 8.

“Everyone’s happy because they think Europe has come to a solution, as ill-defined as it seems to be,” Doug Davis, vice chairman of money manager Davis-Rea Ltd., said in a telephone interview. The firm oversees about C$450 million ($453 million). “They’ve got a lot of blanks to fill in. Should they have achieved a solution, this would be very positive for the market going forward,” he said.

The index has advanced 7.2 percent this month, heading for its biggest increase since May 2009 after falling each of the past seven months. The S&P/TSX rebounded as oil and base metals rallied on speculation European officials would reach an agreement to try to prevent their sovereign debt crisis from weakening banks and the economy.

More Leverage

Stocks climbed today after the European leaders agreed to increase the leverage of the European Financial Stability Facility. Under plans to be spelled out in November, the fund will be used to partly insure bond sales and a special investment vehicle will be created that would court outside money from public and private financial institutions and investors to further boost its muscle.

The U.S. Dollar Index declined the most since May 2009, boosting commodities priced in the American currency.

The S&P/TSX Energy Index rose to the highest close since Aug. 15 and oil reached the highest level since Aug. 1. Suncor gained 4.9 percent to C$32.80. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, advanced 4.5 percent to C$36.04. Athabasca Oil Sands Corp. (ATH), PetroChina Co.’s partner in oil-sands development, surged 9.1 percent, the most since its April 2010 initial public offering, to C$13.51.

Sterling Resources Ltd., which explores for oil and gas in Europe, soared 33 percent, the most since 2004, to C$1.85 after saying it reached an agreement with Romania that will allow it to resume operations in the Black Sea.

Mining Shares

Base-metals and coal producers in the S&P/TSX gained, heading for the largest weekly rally since July 2009. Teck increased 8.1 percent to C$40.35 after raising its dividend. Quadra FNX Mining Ltd. (QUX), which operates in the U.S., Canada and Chile, climbed 12 percent to C$12.19. European Goldfields Ltd. (EGU), which produces base metals and explores for gold in Greece, rose 12 percent to C$11.05.

First Quantum Minerals Ltd. (FM) soared 14 percent, the most since January 2009, to C$21.24 after Fawzi Hanano, an analyst at Goldman Sachs Group Inc., said in a note to clients the copper producer “has a superior pipeline of growth projects.”

Lundin Mining Corp. (LUN), which produces base metals in Europe, slumped 8.1 percent to C$4.08 after saying it broke even in the third quarter, excluding certain items. All 13 analysts in a Bloomberg survey had forecast a profit.

Agnico-Eagle Mines Ltd. (AEM), a gold producer with operations in Canada, Mexico and Finland, dropped 6.6 percent to C$42.37, the lowest since December 2008, after missing analysts’ average earnings estimate.

Argentine Operations

Extorre Gold Mines Ltd. (XG), an explorer with operations in Argentina, rebounded 9.3 percent to C$8.09 after tumbling 21 percent yesterday. The shares had plunged after Argentina ordered resources companies to repatriate all future export revenue.

All eight S&P/TSX banks and the three largest insurers rose. Manulife gained 7.1 percent, the most in 11 months, to C$13.94. Royal Bank of Canada (RY), the country’s largest lender by assets, climbed 3.1 percent to C$49.66. Toronto-Dominion Bank (TD), its biggest domestic rival, advanced 2.8 percent to C$76.10.

Imax Corp. (IMAX), the maker of giant-screen movie-projection systems, gained 11 percent to C$19.44 after raising its forecast for fourth-quarter installations.

Magna International Inc. (MG), Canada’s biggest auto-parts maker, advanced 8.7 percent to C$40.19 after receiving a “sector outperform” rating from Neil Forster, an analyst at Bank of Nova Scotia. (BNS)

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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