Canadian Stocks Climb as Funding Costs Decline in Spain, Italy

Canadian stocks advanced, led by banks and metals producers, as borrowing costs declined in bond sales in Spain and Italy and the U.S. dollar weakened.

Toronto-Dominion Bank (TD), Canada’s second-largest lender by assets, rose 0.9 percent as the S&P/TSX Financials Index (STFINL) gained for a fourth day. Enbridge Inc. (ENB), the country’s biggest pipeline company, fell 2.1 percent as natural gas headed toward its biggest weekly loss since August 2009. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, increased 1.5 percent as the metal climbed for a third day.

The Standard & Poor’s/TSX Composite Index rose 13.38 points, or 0.1 percent, to 12,274.32.

“People are a bit more comfortable with the euro, so it’s a risk-on trade,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($54 million). “You saw gold lose its safe-haven status at the end of the year. It was a flight to safety to the U.S. currency.”

The index has rallied 6.4 percent since Dec. 19 as economic data indicating a strengthening U.S. economy outweighed the impact of the European debt crisis. The S&P/TSX fell nine of the 10 months ending in December as concern that the crisis would limit global economic growth weakened shares of commodity producers.

Yields Decline

Spain sold 10 billion euros ($13 billion) in bonds today, twice its target. Italy sold 12 billion euros in bills at less than half the yield paid on similar-maturity securities on Dec. 12. The euro gained, and the U.S. Dollar Index (DXY) fell after closing at the highest level since September 2010 yesterday.

The eight S&P/TSX banks each gained. TD advanced 0.9 percent to C$77.70. Bank of Nova Scotia (BNS), Canada’s third-biggest lender by assets, increased 1.1 percent to C$52.20. Manulife Financial Corp. (MFC), North American’s fourth-largest insurer, climbed for a record 10th-straight day, rising 1.1 percent to C$11.89.

The S&P/TSX Energy Index dropped as natural gas futures declined for a fourth day. The fuel has tumbled as much of North America has had a milder winter than normal. Crude retreated after a European Union official with knowledge of the matter said an embargo on Iranian oil is likely to be delayed for six months.

Enbridge fell 2.1 percent to C$36.04. Encana Corp. (ECA), the country’s largest natural gas producer, declined 2.2 percent to C$18.20, the lowest close since January 2005. Trilogy Energy Corp. (TET), which produces the fuel in Canada, slumped 7.6 percent to C$30.40 to extend its two-day plunge to 16 percent, the most since October 2008.

Metals Rally

The S&P/TSX Materials Index (STGOLD) gained as precious and base metals advanced. Goldcorp increased 1.5 percent to C$46.78. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, climbed 4 percent to C$23.30. Cameco Corp. (CCO), the world’s biggest uranium producer, rallied 5.3 percent to C$20.67.

Guyana Goldfields Inc. (GUY), which explores in South America, plunged 11 percent, the most in two years, to C$7.40 after delaying the release of a feasibility study on its Aurora project.

Quest Rare Minerals Ltd. (QRM), which explores for rare earths in Canada, soared 26 percent, the most since August 2009, to C$3.27 after reporting drilling results from its Strange Lake project in Quebec.

BlackBerry maker Research In Motion Ltd. rose 5.5 percent to C$16.80. The shares gained on speculation the company hired Goldman Sachs Group Inc. to explore strategic options, Reuters reported, citing a trader it didn’t name.

Bombardier Inc. (BBD/B), the maker of trains and airplanes, rallied 6.9 percent to C$4.52. The company is to participate in the Bahrain International Airshow next week.

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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