Canadian Stocks Rise to 3-Week High as Commodity Producers Rally

Canadian stocks rose, sending the benchmark index to the highest level in three weeks, as an advance in precious metals prices overshadowed disappointing earnings from companies including Alimentation Couche-Tard Inc.

OceanaGold Corp. and Argonaut Gold Inc. rallied at least 7.1 percent as gold climbed. Alimentation Couche-Tard, which operates convenience stores across North America and Europe, slumped 5 percent after adjusted earnings fell short of forecasts due in part to higher expenses in Europe. Jean Coutu Group Inc. (PJC/A), the pharmacy company, fell 2.1 percent after posting first-quarter revenue short of estimates.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 88.22 points, or 0.7 percent, to 12,297.09 at 4 p.m. in Toronto. The gauge has rallied 3.9 percent since hitting its low for the year on June 24. Trading volume was 18 percent below the 30-day average at this time of the day.

“We’re seeing some buying in the gold sector, likely because the entire sector was so oversold,” said Arthur Salzer, chief executive officer of Northland Wealth Management in Toronto. The firm manages C$225 million ($213 million). “There was so much optimism in Couche-Tard and Jean Coutu, that once in a while the stocks get ahead of themselves. The underlying numbers were quite good but maybe not what people were hoping for.”

The International Monetary Fund cut its projection for global growth in 2013 for a fifth time, to 3.1 percent from 3.3 percent in April as a U.S. expansion weakens, China’s economy levels off and Europe’s recession deepens. U.S. growth was trimmed to 1.7 percent from 1.9 percent, while China’s was lowered to 7.8 percent from 8 percent.

Gold Gains

Raw-materials stocks paced gains in the S&P/TSX, rising 1.7 percent as a group. OceanaGold jumped 8.5 percent to C$1.28 and Argonaut Gold gained 7.1 percent to C$5.58 as gold futures for August delivery advanced 0.9 percent to $1,245.90 an ounce in New York. The S&P/TSX Gold Index climbed 1.1 percent as 18 of 25 members advanced.

First Majestic Silver Corp. rallied 4.7 percent to C$11.70 and Pan American Silver Corp. rose 3.2 percent to C$12.13 as silver prices gained.

BlackBerry Ltd. (BB), maker of the BlackBerry 10 line of smartphones, added 1 percent to C$10.20 after investors re-elected the company’s existing directors at an annual general meeting today and approved the company’s name change from Research In Motion Ltd.

Chief Executive Officer Thorsten Heins said at the meeting the company is “100 percent open to partnerships” to drive scale and will explore “every opportunity” to create value.

Consumer-staples companies, which include both Jean Coutu and Couche-Tard, lost the most in the S&P/TSX, declining 0.9 percent as a group.

Couche-Tard

Couche-Tard, the largest publicly traded convenience store chain operator in North America, sank 5 percent to C$58.35, for its biggest decline since May 2012. The Laval, Quebec-based company said fourth-quarter adjusted earnings were 61 cents a share, while analysts surveyed by Bloomberg had estimated 78 cents. Merchandise and service gross margins in the U.S., where Couche-Tard operates the Circle K convenience-store chain, declined 0.1 percent in the quarter.

Jean Coutu lost 2.1 percent to C$17.44. The Longueuil, Quebec-based company reported first-quarter revenue of C$681.6 million, falling short of forecasts for C$688.2 million. Adjusted earnings for the period were 26 Canadian cents a share, in line with analysts’ estimates.

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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