Canadian Stocks Gain as ECB Cuts Rates, Profits Beat Estimates

Canadian stocks rose for a second day after Greece halted a vote on its bailout, the European Central Bank cut its main interest rate and profit at companies including Canadian Natural Resources Ltd. (CNQ) beat estimates.

Canadian Natural, Canada’s second-biggest energy company by market value, jumped 9.3 percent as crude oil and natural gas climbed. Valeant Pharmaceuticals International Inc. (VRX), the country’s largest drugmaker, rallied 13 percent after its third- quarter profit excluding certain items surpassed the average analyst estimate by 15 percent. Yamana Gold Inc. (YRI), Canada’s fourth-biggest gold producer by market value, gained 4.4 percent after raising its dividend.

The Standard & Poor’s/TSX Composite Index increased 226.59 points, or 1.9 percent, to 12,468.35.

“The earnings are good -- not phenomenal, but good,” Arthur Salzer, chief executive officer of Northland Wealth Management in Toronto, said in a telephone interview. The firm oversees about C$200 million ($198 million). “And any time you bring down interest rates to the low levels there are, any risk assets become a lot more attractive.”

The index had slipped this week after surging 5.4 percent in October as Greek Prime Minister George Papandreou said he will subject his country’s bailout plan to a referendum. The S&P/TSX is set to underperform the S&P 500 for the first year since 2003 as energy stocks have declined on concern the global economy will slow. Canada is the world’s sixth-largest oil producer, according to the U.S. Energy Department.

Unexpected Cut

The ECB lowered its main refinancing rate to 1.25 percent from 1.5 percent. Among 55 economists in a Bloomberg News survey, six had forecast a cut. Stocks extended their gains today after Greek Finance Minister Evangelos Venizelos said the country won’t hold the referendum.

Crude oil advanced to a three-month high and natural gas climbed for the first time in three days on the New York Mercantile Exchange. PetroBakken Energy Ltd. (PBN), a western Canadian energy producer, increased 7.6 percent to C$9.20.

Canadian Natural gained 9.3 percent to C$38.23 after reporting third-quarter earnings that beat the average estimate of analysts in a Bloomberg survey by 19 percent, excluding certain items. Suncor Energy Inc. (SU), the country’s largest oil and gas producer, rose 4.4 percent to C$33.20 after its profit excluding certain items topped the average analyst estimate by 39 percent.

Valeant surged 13 percent, the most since January, to C$44.08. SXC Health Solutions Corp. (SXC), a pharmacy-benefits manager, jumped 6 percent to C$47.99 after beating the average analyst estimate for third-quarter adjusted earnings by 2.3 percent and raising its 2011 forecasts for earnings and revenue.

Surpassing Estimate

Dundee Precious Metals Inc. (DPM), which operates in Bulgaria and Armenia, rallied 12 percent, the most since October 2009, to C$8.91 after surpassing its average profit estimate by 24 percent, excluding certain items.

Among companies that missed analysts’ earnings estimates, Sun Life Financial Inc. (SLF), Canada’s third-largest insurer, fell 4.8 percent to C$22.85, the lowest in 31 months, after reporting its first quarterly loss in two years. Manitoba Telecom Services Inc. (MBT), a Winnipeg, Manitoba-based phone company, sank 7.2 percent, the most since August 2010, to C$30.37 after missing the average forecast by 10 percent.

Industrial Alliance Insurance and Financial Services Inc. lost 6.8 percent to C$26.80, the lowest since July 2009, after analysts at BMO, Canaccord Financial Inc. and National Bank of Canada cut their ratings on the company. The shares plunged 11 percent yesterday after the insurer’s earnings missed the average analyst estimate by 31 percent, excluding certain items.

Gold Surge

Gold stocks in the S&P/TSX climbed as the metal advanced to a six-week high after the ECB decision.

Barrick Gold Corp. (ABX), the world’s largest company in the industry, increased 2.4 percent to C$52.40. Yamana Gold rose 4.4 percent to C$16.28 after boosting its quarterly dividend 11 percent. Lake Shore Gold Corp. (LSG), which mines in Ontario, soared 16 percent to C$1.89.

First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, rallied 9 percent to C$22.35. The company’s Enterprise nickel project in Zambia may produce 40,000 to 70,000 metric tons a year, First Quantum said in a statement today.

Most financial companies other than Sun Life and Industrial Alliance gained. Bank of Nova Scotia (BNS), Canada’s third-largest lender by assets, advanced 1.9 percent to C$52.93. Bank of Montreal (BMO), the No. 4 lender, increased 1.1 percent to C$58.70. Manulife Financial Corp. (MFC), North America’s fourth-largest insurer, surged 4.5 percent to C$13.11.

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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