Canada Stocks Rally to 2-Year High After Fed Maintains Stimulus

Canadian stocks rose to the highest in two years, as mining companies rallied after the U.S. Federal Reserve unexpectedly refrained from reducing the pace of its monthly bond buying.

Barrick Gold Corp. surged 8.6 percent as the metal jumped the most since 2009. Athabasca Oil Corp. soared 4.7 percent after oil extended a rally following the Fed decision. Catamaran Corp. plummeted 9 percent to lead health-care companies lower. BlackBerry Ltd. sank 2.2 percent after a report said the smartphone maker may cut staff.

The Standard & Poor’s/TSX Index jumped 97.29 points, or 0.8 percent, to 12,931.40 at 4 p.m. in Toronto, erasing an earlier decline of as much as 0.3 percent. The gauge has advanced 2.2 percent so far in September to close today at the highest level since July 2011.

“There is a wash of money on the sidelines, so people will be pushed into stocks as it goes higher and higher,” Paul Harris, partner and portfolio manager at Avenue Investment Management in Toronto, said in a phone interview. He helps oversee C$300 million ($294 million). “Gold and oil and the metals going up will certainly help Canada. You’re seeing a great rally.”

Fed Chairman Ben S. Bernanke and his policy making colleagues held back from paring record accommodation as rising borrowing costs show signs of slowing the four-year U.S. economic expansion. The stimulus has helped fuel a rally in global stocks.

Materials Rally

Among 64 economists surveyed by Bloomberg News, 33 predicted officials would will reduce monthly buying of Treasuries by $5 billion or less, with 31 forecasting a cut of $10 billion or more.

Five of 10 main groups in the benchmark Canadian equity gauge advanced, led by a 5.1 percent rally among raw-materials producers.

The S&P/TSX Materials Index erased an earlier decline of as much as 1 percent as metals surged on the Fed decision. All ten of the Canadian benchmark index’s top performers were miners of precious metals.

Gold for immediate delivery rallied 4.1 percent for the biggest gain since January 2009. Copper futures rose the most in two weeks and silver surged 5.9 percent at 4:35 p.m.

Barrick Gold, the world’s largest gold producer, soared 8.6 percent to C$20.50, its biggest jump since 2008. Aurico Gold Inc. rose 15 percent to C$4.54. Endeavor Silver Corp. jumped 15 percent to C$5.14.

Goldcorp Reversal

Goldcorp Inc. rose 7.5 percent to $29.11, erasing an earlier loss after Chairman Ian Telfer reached a deal with Canada’s main financial regulator to settle allegations that he violated securities laws. The Ontario Securities Commission will hold a hearing on Sept. 20 on whether to approve the settlement, the OSC said yesterday in a statement.

Energy producers gained 0.5 percent as crude advanced the 2.5 percent, the most in three weeks. Athabasca Oil rose 4.7 percent to C$7.85, the stock’s highest price in over a month.

Catamaran, a provider of pharmacy benefits management, fell 9 percent to C$51.94, the lowest since July 17. Walgreen Co., one of the company’s main customers, said yesterday it would switch its employees into a private insurance exchange in 2014. Goldman Sachs & Co. analyst Robert Jones said the impact to PBMs from the Walgreen move is “unclear.”

BlackBerry plunged 2.2 percent to C$10.64, erasing an earlier gain of as much as 2 percent. The stock reversed after Dow Jones reported the smartphone maker was preparing for “deep” staff cuts by the end of the year, citing people familiar with the situation. The shares rallied earlier on news the company would start selling a new version of its phone next week.

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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