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Canada Stocks Erase Gains as Sanctions Offset Earnings

Canadian stocks erased gains, closing near a record, as new U.S. and European sanctions against Russia overshadowed better-than-forecast corporate earnings.

WestJet Airlines Ltd. (WJA) advanced 3.9 percent, the most since September, after second-quarter profit rose 16 percent and the carrier said it expects to keep a lid on costs in 2014 amid continued revenue growth.

The Standard & Poor’s/TSX Composite Index (SPTSX) rose 1.33 points, or less than 0.1 percent, to 15,446.55 at 4 p.m. in Toronto. The index closed at a record 15,455.04 on July 25. The equity index trades at 21.2 times earnings, the highest level since 2010.

The U.S. sanctioned three Russian banks and a state-owned shipbuilder that serves Russia’s navy and oil and gas industry, joining with the European Union today in escalating the penalties for Russia over its actions in Ukraine. The EU curbed Russia’s access to bank financing and advanced technology in its widest-ranging sanctions yet.

The U.S. Federal Reserve will announce its next policy decision tomorrow and investors will get a reading on second-quarter growth the same day. The U.S. is Canada’s largest trading partner.

Seven of 10 industries in the S&P/TSX advanced on trading volume 4.5 percent lower compared with the 30-day average.

WestJet Profit

WestJet soared 3.9 percent to C$28.49 for a sixth day of gains. Earnings increased as revenue for each seat flown a mile was up 4.8 percent, outpacing the 4.2 percent rise in costs on that basis. The Calgary-based airline also said that excluding fuel and employee profit sharing, those expenses will climb 1.5 percent to 2 percent this year, down from an earlier outlook of as much as 2.5 percent.

Air Canada, the largest airline in the nation, added 2.2 percent to C$9.79. It’s scheduled to report earnings on Aug. 7.

BlackBerry (BB) Ltd. retreated 4 percent to C$10.32, erasing earlier gains, as Ford Motor Co. will replace its BlackBerry smartphones with Apple Inc. iPhones for about 3,300 workers by the end of the year.

The company also agreed to buy Secusmart GmbH, a provider of anti-eavesdropping technology whose clients include German officials such as Chancellor Angela Merkel. Financial terms weren’t disclosed for the deal. John Chen, chief executive officer of BlackBerry, was in New York today presenting the company’s plans for its securities services with media and analysts.

Athabasca Oil Corp. sank 7.2 percent to C$5.95, the lowest close since May 2013. The stock has plunged 14 percent in the past two days as Athabasca continues to wait for a C$1.32 billion payment from PetroChina Co. for a Canadian oil-sands project.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

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

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