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Canada Stocks Rise as Easing Fed Concern Boosts Commodity Shares

Canadian stocks rose, following the biggest retreat in two weeks yesterday, as commodity producers advanced after concern over possible cuts to U.S. central bank stimulus eased.

Niko Resources Ltd., the Canadian oil and natural gas explorer, jumped 10 percent to lead energy shares higher despite a decline in oil prices amid continuing talks over Syria. Centerra Gold Inc. and B2Gold Corp. rallied at least 5.2 percent. Canadian Pacific Railway Ltd. and Canadian National Railway Co. gained more than 0.5 percent. Silvercorp Metals Inc. fell 2 percent as the commodity’s price tumbled.

The Standard & Poor’s/TSX Composite Index rose 22.35 points, or 0.2 percent, to 12,723.40 at 4 p.m. in Toronto. Trading volume was 12 percent below the 30-day average. The benchmark Canadian index trimmed its loss for the week to 0.8 percent.

Stocks rose after a “long week of selling pressure on the Canadian markets” due to the lowering tensions over Syria, Paul Gardner, portfolio manager at Avenue Investment Management, said in a phone interview. His firm oversees C$300 million ($290 million). “What gets hit hard is oil and gold. But it was a bit overdone, so we are seeing a bit of a relief rally” in those industries.

Oil and gold prices led commodities lower today after the U.S. and Russia discussed a plan for Syria to surrender chemical weapons. U.S. Secretary of State John Kerry reported a “constructive” start to the talks. President Barack Obama has delayed a possible U.S. military intervention to take up the proposal for international oversight of Syria’s chemicals arsenal.

Fed Stimulus

Equities rose as concerns eased over possible cuts to U.S. central bank stimulus. Investors, who have been scrutinizing economic data to determine whether growth is robust enough for the Federal Reserve to slow stimulus following its Sept. 17-18 meeting, will see a reduction next week as no big deal, according to a Bloomberg Global Poll of investors.

Fifty-seven percent of those surveyed say they don’t expect a sudden change in the markets because investors already anticipate tapering action.

U.S. data today showed retail sales rose 0.2 percent, the smallest increase in four months and below the 0.5 percent advance seen in Bloomberg survey. Consumer confidence in the U.S. declined in September to the lowest level since April. Wholesale prices in the U.S. rose more than forecast in August, while a separate report showed inventories at companies increased more than forecast in July.

‘Somewhat Disappointing’

“The retail sales were somewhat disappointing, but put all of the economic data together and it seems neutral,” Richard Sichel, who oversees about $1.9 billion as chief investment officer at Philadelphia Trust Co., said by phone. “The fear of the Fed taper has gone away, as has the immediacy of the Syrian crisis.”

Energy shares rose 0.2 percent as a group, even as West Texas Intermediate crude capped its biggest weekly drop since July. Six out of 10 industries advanced in the S&P/TSX.

Calgary-based Niko Resources increased 10 percent to C$4.17. The gas and oil company’s stock had plummeted as much as 68 percent this year, reaching an almost 15-year low on Sept. 6.

AltaGas Ltd. shares rose 1.2 percent to C$35.43 after the company said late Thursday it will acquire a 25 percent stake in Petrogas Energy Corp., a privately held North American integrated midstream company.

Gold Companies

Raw-materials stocks added 1.4 percent. Centerra Gold paced gains among mining companies, rising 7 percent to C$6.27 for its largest increase in more than three weeks. B2Gold Corp. climbed 5.2 percent to C$2.63. Gold companies plunged 5.3 percent as a group yesterday.

Gabriel Resources Ltd. rallied 12 percent to 93 Canadian cents. The gold and silver exploration company, backed by billionaire hedge-fund manager John Paulson, slumped 54 percent on Sept. 9, its biggest decline in 25 years. The drop came on news that Romania’s prime minister urged lawmakers to reject plans for a gold mine.

Silvercorp Metals tumbled 2 percent to C$3.41. Silver futures dropped 1.9 percent, while gold for December delivery was down 1.7 percent today. Both metals had the largest weekly decline since June.

Potash Corp. of Saskatchewan Inc., Canada’s largest maker of the fertilizer, rallied 2.3 percent to C$33.57 and Agrium Inc. climbed 1.4 percent to C$92.55.

Potash Prices

Russian entrepreneur Vladimir Kogan, a longtime ally of President Vladimir Putin, is the leading bidder for the world’s leading potash producer, OAO Uralkali. Kogan is seeking to buy out the company’s three main shareholders, according to people familiar with the situation.

The talks began after Belarus arrested Uralkali Chief Executive Officer Vladislav Baumgertner Aug. 26, a month after he pulled out of a trading venture with Belarus, said the people familiar with the matter. The breakup of the venture sent potash prices plummeting.

“People view this sale of stock as a precursor event to the BPC export agency getting back together again,” Mark Gulley, a New York-based analyst at BGC Partners LP, said by phone, referring to Uralkali and Belaruskali’s venture, Belarusian Potash Co. “A lot of people believe that this is one of many steps to BPC getting back together again.”

Industrial shares gained 0.4 percent as railroad companies climbed. Canadian Pacific Railway jumped 1.7 percent to C$127.75. Canadian National Railway gained 0.5 percent to C$101.28.

To contact the reporter on this story: Aubrey Pringle in New York at apringle1@bloomberg.net

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

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