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Canadian Stocks Post Biggest Two-Day Gain in a Month

Canadian stocks rose a second day for the biggest two-day gain in more than a month after commodity producers advanced on rising gold and copper prices.

Detour Gold Corp. (DGC) and Semafo Inc. rallied at least 4.8 percent as gold snapped two days of losses. Royal Bank of Canada and Bank of Nova Scotia paced gains among financial stocks. Air Canada (AC/B), the nation’s largest airline, dropped 2.8 percent after analysts with National Bank Financial lowered their rating on the stock. Africa Oil Corp. tumbled 9 percent after the company said that it has plugged and abandoned a well in Kenya.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 32.06 points, or 0.2 percent, to 13,312.78 at 4 p.m. in Toronto. The measure has advanced 0.9 percent in the past two days, the most since Oct. 25. The benchmark equity gauge has risen 7.1 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“The unemployment numbers were good on Friday and we’re seeing some follow-through here,” said John Kinsey, a fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($937.9 million) with the firm. “It’s primarily the financials and gold doing well today. The market had a nice run in the fall and was perhaps overextended. Now we have a bit of a base and maybe we’ll head up again.”

Housing starts in Canada fell to a seasonally adjusted annual rate of about 192,000 units in November, a 3 percent decline from about 198,000 in October, as construction of multiple-unit projects such as condominiums fell.

Consumer Confidence

The weekly Bloomberg Nanos Canadian Confidence Index, a measure of consumer sentiment, increased to 59.3 in the period ended Dec. 6 and is nearing a one-year high of 59.8. The share of respondents who think real-estate prices will increase over the next six months rose to 40.3 from 40.0 the previous week, the highest level since March 2012.

Five of 10 industries in the S&P/TSX advanced on trading volume 5.1 percent higher than the 30-day average.

Royal Bank, the nation’s largest lender, climbed 1 percent to C$69.75 and the Bank of Nova Scotia added 0.5 percent to C$64.30 as financial stocks rose 0.3 percent as a group. Canada’s largest banks slipped 2 percent after reporting quarterly earnings last week.

Semafo (SMF) jumped 4.8 percent to C$2.60 and Detour Gold climbed 7.8 percent to C$3.86, as all but two of the 24 members of the S&P/TSX Gold Index increased. Detour Gold is the worst-performing stock in the S&P/TSX this year, slumping 84 percent.

Gold rose from a five-month low as investors weighed the outlook for reduced U.S. stimulus as early as next week against speculation physical demand may increase at lower prices. Gold for February delivery advanced 0.4 percent in New York.

Gold Shares

Barrick Gold Corp. rallied 3.9 percent to C$17.01 and Canadian Natural Resources Ltd. added 1.1 percent to C$34.58 after a cover story in Barron’s included the two stocks among 10 that may be winners in 2014.

First Quantum Minerals Ltd. gained 2 percent to C$17.55 and Teck Resources Ltd. increased 0.9 percent to C$25.21. Copper rose 0.2 percent to a four-week high in New York.

Africa Oil sank 9 percent to C$8.99, falling the most in a year, after the company said its Bahasi well in Kenya has been stopped after finding sand and shale with only “minor shows” of gas.

Air Canada, the best-performing stock in the S&P/TSX this year, fell 2.8 percent to C$7.71, the biggest decline in three weeks. Cameron Doerksen, an analyst with National Bank Financial, lowered his rating for the stock to sector perform, the equivalent of a hold, from outperform, or buy. The primary reason for the downgrade was the stock is approaching Doerksen’s target price of C$8, according to a research report from the bank. Air Canada has soared 341 percent 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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