Canadian Stocks Rise as Manufacturing Indexes Gain in EU, China

Canadian stocks rose for a second day, led by banks and energy producers, after manufacturing indexes in Europe and China surpassed most analysts’ forecasts.

Royal Bank of Canada (RY), the country’s largest lender by assets, increased 1.7 percent as banks climbed for the first time in seven days. Cenovus Energy Inc. (CVE), Canada’s fifth-biggest energy company, rallied 1.9 percent as oil and gas stocks advanced. Valeant Pharmaceuticals International Inc. (VRX), Canada’s largest drugmaker, gained 3.9 percent after saying it will buy a Brazilian food supplements company.

The S&P/TSX Composite Index (SPTSX) rose 65.51 points, or 0.5 percent, to 12,517.66.

“Canada is very much tied to global growth,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$1 billion ($1 billion). “Over the last several months, there’s been a pick-up in economic numbers. In China, there’s more and more confidence they’re not going to have this hard landing some people were talking about.”

The S&P/TSX gained 4.2 percent in January, its second monthly advance in 11 months, as raw-materials producers surged 10 percent on higher metals prices. Gold had its biggest January rally since 1983 and copper increased after the U.S. Federal Reserve extended its low-interest-rate pledge to late 2014. The industry accounts for 22 percent of Canadian stocks by market value, according to Bloomberg data.

Indexes Top Forecasts

Purchasing managers’ indexes from China and the U.K. showed manufacturing expanded faster in January than most economists in Bloomberg surveys had forecast. In the euro region, manufacturing contracted less than the median economist forecast.

Greece may offer to promise a reduction in bondholders’ losses in a debt swap that would take effect if the country’s economy rebounds, people with knowledge of the confidential talks said. Owners of Greek debt have been negotiating an exchange of their bonds for newer ones that would pay a lower interest rate.

Bank shares in the S&P/TSX ended their longest streak of losses since July. Royal Bank climbed 1.7 percent to C$53.28. Bank of Montreal, Canada’s second-largest lender by assets, rose 0.9 percent to C$58.80. Manulife Financial Corp. (MFC), North America’s fourth-biggest insurer, gained 2 percent to C$11.94.

Cenovus, Canadian Natural

The S&P/TSX Energy Index (STENRS) advanced for a second day. Cenovus increased 1.9 percent to C$37.29. Canadian Natural Resources Ltd. (CNQ), the country’s second-largest energy company by market value, climbed 1.1 percent to C$40.16.

TransGlobe Energy Corp. (TGL), which produces oil and gas in Egypt and Yemen, rose 6.5 percent to C$10.40 to extend its three-day surge to 10 percent. The company’s daily average oil production increased 41 percent in January from the fourth quarter of 2011, Calgary-based TransGlobe said Jan. 30.

Flint Energy Services Ltd. (FES), an oilfield-services company, rallied 6.4 percent to C$15.73 after gaining 5.6 percent yesterday. Frederic Bastien, an analyst at Raymond James Financial Inc., began coverage of the company with a “strong buy” rating yesterday, citing its diverse activities and growth in the shale gas and natural gas liquids industries.

Lowered Forecast

Golden Star Resources Ltd. (GSC), which mines gold in Ghana, sank 7.3 percent to C$2.03 after Paolo Lostritto, an analyst at National Bank of Canada, cut his rating on the shares to “underperform” from “sector perform.” Lostritto cited the company’s lowered production forecast for 2012.

Valeant gained 3.9 percent to C$50.47 after agreeing to buy Probiotica Laboratorios Ltda., based in Embu das Artes, Sao Paulo, for 150 million reais ($86 million). Probiotica had about 80 million reais in revenue last year, Valeant said in a statement.

Westport Innovations Inc. (WPT), which develops natural-gas engine technologies, dropped 7.5 percent to C$38.50 after Navistar International Corp. said it will sell heavy-duty trucks with engines it is developing with Clean Air Power Ltd. Westport closed at a 10-year high yesterday.

Dundee Precious Metals Inc. (DPM), which operates in Bulgaria, Armenia and Namibia, surged 7.4 percent to C$10.11, the highest since December 2010. A company memo says the Namibian government has found no health or environmental reason to immediately close the Tsumeb smelter, the government newspaper New Era reported today.

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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