Yamana, the country’s fourth-largest gold producer by market value, advanced 3.1 percent after the metal rose to a three-month high and executives from Barrick Gold Corp. (ABX) and Goldcorp Inc. (G) said mining shares are cheap relative to earnings. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer, slipped 1.5 percent as wheat declined in Chicago.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 30.02 points, or 0.2 percent, to 12,731.28 in Toronto, the highest since Aug. 31.
“Good times are here again in terms of commodity prices,” Barry Schwartz, portfolio manager with Baskin Financial Services Inc. in Toronto, said in a phone interview. The firm oversees about C$450 million ($451 million). The gains in the stock market have been muted, he said, because investors are still wary after 2008, when they were “sliced and diced” by holding onto commodity stocks.
The index has rallied 2.2 percent this week after Greece won a second bailout, and has gained eight of the past nine weeks as improving U.S. employment, manufacturing and housing data overshadowed the European debt crisis. Materials, oil and gas make up 47 percent of the Canadian market. Seventy-four percent of Canadian exports went to the U.S. last year, according to Statistics Canada.
Gold rose 0.8 percent to settle at $1,786.30 an ounce. Oil rose 1.5 percent to $107.83, the highest settlement since May. Canadian commodity stocks don’t fully reflect the gains in the underlying commodities, Schwartz said.
Missing the Memo
“The stocks are reacting to this as if gold is still at $1,600 and oil is at $90 a barrel,” Schwartz said. “Someone sent the memo but Canadian investors didn’t get it.”
A gauge of materials companies advanced, with 50 of the 74 companies posting gains. Gold rose to a three-month high in New York after the dollar fell against a basket of currencies as a report showed German business confidence rose to the highest level in seven months in February.
Executives of the world’s two largest producers of the metal, Goldcorp and Barrick, said producers of metal are poised to outperform bullion after gold-mining shares fell to their cheapest in at least a decade. Barrick slipped 0.2 percent to C$49.40, while Goldcorp added 0.3 percent to C$49.35.
An index of energy shares in the S&P/TSX rose for a third day.
Pacific Rubiales Energy Corp. (PRE) rose 7.8 percent to C$29.44. The Toronto-based oil producer that operates fields in Colombia surged to a six-month high after its 2011 oil and natural-gas reserves gained 52 percent from the year before.
Loblaw Cos., the country’s biggest grocer, led losses among consumer staple companies and fell 5.7 percent to C$35.25 after it forecast profit this year will be down from 2011 due to higher costs for technology.
Potash Corp. fell 1.5 percent to C$46.65 as wheat declined on speculation that rising global inventories will cut demand for grain from the U.S. The stock was cut to underperform from sector perform by National Bank Financial Inc., meaning it is expected to perform worse than competitors.
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