Canadian Stocks Rise as Bank Rally Overshadows Commodities Slump

Canadian stocks climbed, with the Standard & Poor’s/TSX Composite Index (SPTSX) advancing in the last half hour of trading, as a rally in financial shares overshadowed a slump in commodities and a rise in household debt to a record.

Manulife Financial Corp. (MFC), Canada’s largest insurer, advanced 1.5 percent. Royal Bank of Canada (RY), the nation’s largest lender, and Toronto-Dominion Bank (TD) rose at least 0.5 percent. Argonaut Gold Inc. plunged 7.9 percent after agreeing to buy Prodigy Gold Inc. (PDG) for C$320.3 million ($327.6 million). Turquoise Hill Resources Ltd. (TRQ) retreated 5.1 percent after the company rejected demands from the Mongolian government to renegotiate a mining deal.

The S&P/TSX rose 27.92 points, or 0.2 percent, to 12,229.96 in Toronto, erasing earlier losses of as much as 0.5 percent. The benchmark equity gauge slumped 1.8 percent last week for the biggest drop since June 1.

“There’s a lot of cash on the sidelines and people are skittish. You need some impetus to buy,” Irwin Michael, fund manager with ABC Funds, said in an interview from Toronto. His firm manages about C$800 million. “It’s to be expected debt will go up in tougher economic times, but we can’t get mesmerized by all the data.”

Canadian household debt compared with disposable income jumped to a record 165.8 percent in the second quarter, Statistics Canada said, heightening concerns borrowing will weigh on the country’s economic outlook.

The first-quarter figure was also revised to 164.2 percent from a previous 154.3 percent. Today’s report made historical revisions back to 1990, which raised the debt ratio in recent years due to a higher estimate of credit-market debt and reduced income.

Manulife Rises

Manulife added 1.5 percent to C$12.03. Royal Bank rose 0.7 percent to C$57.24 and TD Bank gained 0.5 percent to C$81.45. Financial stocks contributed most to gains on the benchmark Canadian equity gauge as nine of 10 industries advanced on trading 25 percent lower than the 30-day average.

Raw materials stocks had the only decline among groups in the S&P/TSX, falling 0.2 percent. Gold for December delivery fell the most in three months, slipping 1.3 percent to settle at $1,737.60 an ounce in New York as reports showed U.S. retail sales increased last month more than forecast and inflation slowed in China.

Argonaut Gold (AR) tumbled 7.9 percent to C$9.65, its biggest loss since May 2011, after announcing a deal to buy Vancouver- based Prodigy Gold and its Magino gold project in northern Ontario. Prodigy Gold soared 42 percent to 98 cents, its highest level in almost four years.

Turquoise Hill

Turquoise Hill Resources retreated 5.1 percent to C$8.12 after the company, along with its partner Rio Tinto Group, said they rejected a request by Mongolia to renegotiate a 2009 deal over the $6.2 billion Oyu Tolgoi copper and gold mine.

London-based Rio Tinto owns 51 percent of Turquoise Hill, formerly Ivanhoe Mines Ltd.

Barrick Gold Corp. (ABX), the world’s largest gold producer, slipped 0.8 percent to C$37.99 and Detour Gold Corp. (DGC) retreated 4.1 percent to C$26.60.

Crude for November delivery fell 1 cent to settle at $91.85 a barrel in New York. Oil last week posted its first weekly gain in a month as increasing Middle East tension prompted concern that supplies may be disrupted.

Canadian Natural Resources Ltd. (CNQ), the nation’s third-largest oil company by market value, lost 0.5 percent to C$30.10 and Talisman Energy Inc. (TLM) declined 0.6 percent to C$12.70.

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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