Canada Stocks Rise as Metals Producers Gain, Energy Shares Fall

Canadian stocks rose for a fourth day, with a rally in metals miners offsetting losses among banks and oil producers, as investors weighed the pacing of U.S. central-bank stimulus measures.

First Quantum Minerals (FM) Ltd. and Teck Resources Ltd. gained at least 1.7 percent as the price of copper advanced to a five-week high amid supply concerns. Copper Mountain Mining Corp. (CUM) jumped 9.3 percent after repairing a transformer at its mine sooner than it estimated. Barrick Gold Corp. and Goldcorp Inc. increased more than 1.7 percent even as the metal’s price declined. Royal Bank of Canada, the nation’s largest lender, dropped 0.6 percent and Suncor Energy Inc. lost 1 percent.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 10.07 points, or 0.1 percent, to 12,752.50 at 4 p.m. in Toronto, after gaining as much as 1.2 percent earlier in the session. The benchmark equity gauge has added 2.2 percent over four trading days. Trading volume was 17 percent higher than the 30-day average.

“We started off fairly positively this morning with the Bernanke comments,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$15 billion ($14.4 billion). “With the FOMC minutes, we saw them talk of more stabilization, of a more positive outlook to the economy, and markets are taking that as less stimulus. In the medium to long term it’s positive, but any comments on less stimulus are a short-term negative.”

A number of Federal Reserve officials said they were willing to taper bond buying as early as the next policy-maker meeting in June if economic reports show “evidence of sufficiently strong and sustained growth,” according to minutes from the April 30-May 1 gathering released today.

Bernanke Testimony

Fed Chairman Ben S. Bernanke said earlier in testimony prepared for a Congressional hearing today that a premature withdrawal of stimulus would put the U.S. economic recovery at risk. The banker later told lawmakers that as the outlook for the labor market “improves in a real and sustainable way, the committee will reduce the flow of purchases.”

Gold rallied more than 2.5 percent following the prepared statements, but turned lower as Bernanke answered questions from lawmakers about the possible timing of reducing the rate of bond purchases. The metal settled down 0.7 percent to $1,367.40 in New York and maintained losses after the Fed minutes were released at 2 p.m.

“The news today is very clearly that, you taper off bond buying there’s less liquidity and it’s not good for gold,” said Jeffrey Burchell, a fund manager with Aston Hill Financial Inc. in Toronto. His firm manages about C$7 billion. The rise in miner stocks is “a bounce off the bottom for gold producers, they’ve been so beaten up,” he said.

Materials Rally

The S&P/TSX Materials Index rallied 1.7 percent, extending yesterday’s 1.6 percent advance. The gauge has fallen 23 percent this year as the price of gold retreated into a bear market. Barrick Gold added 1.7 percent to C$20.21 and Goldcorp rose 3.1 percent to C$28.19.

Kirkland Lake Gold Inc. (KGI) jumped 13 percent to C$4.22 for the biggest gain in the benchmark equity index. The company said yesterday it met its 2012 target for replacing proven and probable reserves mined by the company at its complex in Kirkland Lake, Ontario. Barrick is down 42 percent this year and Goldcorp has fallen 23 percent.

Copper Advances

First Quantum Minerals gained 1.7 percent to C$19.22 and Teck Resources rallied 3.4 percent to C$29.46. Copper futures rose 0.7 percent at 4:40 p.m. in New York. The industrial metal earlier touched a five-week high of $3.418 a pound on mounting concern that a deadly accident at the world’s second-biggest mine may crimp supplies as a recovering housing market boosts demand in the U.S.

Sales of existing U.S. homes in April were the highest since November 2009, a report from the National Association of Realtors showed today.

Copper Mountain Mining soared 9.3 percent to C$1.77 after the company said it replaced a damaged transformer at its mine in southern British Columbia and had resumed operations earlier than previously estimated. The stock fell 9.5 percent May 17; the company disclosed the transformer problem May 16 after the end of regular trading.

Royal Bank dropped 0.6 percent to C$63.46 and the Bank of Nova Scotia declined 0.4 percent to C$59.49 as financial stocks retreated 0.3 percent, the first decline in four days.

Suncor lost 1 percent to C$32.50 and Pembina Pipeline Corp. fell 2.7 percent to C$34.66. Crude for July delivery fell the most in three weeks as a government report showed U.S. gasoline supplies unexpectedly gained and crude stockpiles declined less than expected. The dollar strengthened on Bernanke’s comments, accelerating oil’s drop.

Catamaran Corp., a drug-benefits manager, slumped 2.5 percent to C$50.42, its lowest close since January. UBS analyst Steven Valiquette said the company is at risk of losing its contract with Cigna Corp.’s HealthSpring PBM when the deal expires at the end of this year.

To contact the reporter on this story: 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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