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Canadian Stocks Rise as Oil, Metals Advance on Japan Bond Pledge

Jan. 11 (Bloomberg) -- Canadian stocks rose for the first time in six days as oil and metal prices gained after Japan pledged to buy European bonds to ease the sovereign-debt crisis.

Suncor Energy Inc., Canada’s largest oil and gas producer, increased 1.6 percent as crude oil advanced the most in five weeks. Royal Bank of Canada, the country’s largest lender by assets, climbed 1.7 percent after Darko Mihelic, an analyst at Cormark Securities Inc., named it a “top pick.” Copper producer Taseko Mines Ltd. surged 17 percent after announcing what it called “highly successful” drilling results at a niobium-mining project.

The Standard & Poor’s/TSX Composite Index rose 155.93 points, or 1.2 percent, the most since Dec. 21, to 13,401.05.

“When the market is negative, after a while we will have a day where investors will just back in,” said Todd Johnson, who helps oversee C$250 million ($253 million) as a money manager at BCV Asset Management in Winnipeg, Manitoba. “If you’re not owning equities, the other option is bonds and cash, and yields are still very modest. You can be pushed into equities on a relative-value basis.”

The S&P/TSX fell 1.5 percent this month through yesterday as gold and copper futures dropped at least 3.3 percent. Gold declined as reports of expansion in U.S. manufacturing and services reduced demand for precious metals, while copper retreated on concerns China might raise interest rates.

The S&P 500 and Dow Jones Industrial Average, which has less weighting in energy and natural resources than the Canadian stock market, rose 1 percent and 0.5 percent, respectively, this year through yesterday.

‘Catch-Up Day’

“Usually, the TSX does trade off the Dow fairly closely,” said David Cockfield, who helps oversee about C$300 million at MacNicol & Associates Asset Management in Toronto. “We’re back into a more-normal pattern, but we have a little bit of catching up to do. This is sort of a catch-up day.”

Oil and base metals advanced today after Japanese Finance Minister Yoshihiko Noda said Japan will buy bonds issued by the European Financial Stability Facility this month.

Crude futures climbed for a second day after losing 3.7 percent last week. A Bloomberg survey showed most analysts forecast a drop in inventories in tomorrow’s weekly report from the U.S. Energy Department. The S&P/TSX Energy Index advanced the most since Dec. 1.

Suncor, Nexen

Suncor gained 1.6 percent to C$37.43. Pacific Rubiales Energy Corp., which operates Colombia’s largest oil field, rallied 7.4 percent to C$33.79 after saying its crude output will increase 73 percent by the end of 2014. Nexen Inc., an oil and gas producer with operations on five continents, jumped 5.5 percent, the most since June 2009, to C$23.01 after Menno Hulshof, an analyst at Toronto-Dominion Bank, raised his rating on the shares to “buy” from “hold.”

Copper, gold and silver advanced after Deutsche Bank AG raised its 2012 price estimates for the metals. Canadian Imperial Bank of Commerce also boosted its price forecasts for base metals.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, climbed for the first time in a week, increasing 4.3 percent to a record C$63.11. Jorge M. Beristain, an analyst at Deutsche Bank, boosted his 12-month price estimate on Teck’s U.S. shares to $77 from $65. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, rallied 4.4 percent to C$119.67, also a record.

Taseko Rises

Taseko soared 17 percent, the most since March 2009, to C$5.87 after announcement the drilling results from its Aley Niobium Project in British Columbia. Niobium is used in steelmaking.

Uranium producer Denison Mines Corp. advanced 6.6 percent to C$3.24 a day after Mike Kozak, an analyst at Cormark Securities Inc., raised his rating on the stock to “buy” from “speculative buy.”

Precious-metals producers rose on speculation Portugal will need a bailout similar to those issued to Ireland and Greece last year. Barrick Gold Corp., the world’s largest producer of the metal, advanced 1.5 percent to C$49.44.

Eldorado Gold Corp., Canada’s fifth-biggest gold producer by market value, rose 5.8 percent, the most since May, to C$17.88 after forecasting a 15 percent to 20 percent increase in production for this year. Romarco Minerals Inc., which is developing a gold deposit in South Carolina, gained 13 percent to C$2.30 after releasing drilling results that Andrew Kaip, an analyst at Bank of Montreal, called “impressive” in a note to clients.

First Majestic Silver Corp., which operates in Mexico, surged 7.6 percent to C$13.84 on the Toronto Stock Exchange after announcing 2010 production that exceeded company forecasts by 9 percent. First Majestic shares have jumped 213 percent over the past 12 months, trailing only Transglobe Energy Corp.’s 294 percent gain among S&P/TSX stocks.

The S&P/TSX Banks Index climbed the most in three weeks. Royal Bank rallied 1.7 percent to C$52.56 after Cormark’s Mihelic told clients in a note that the company’s earnings will grow faster than those of its peers. Bank of Nova Scotia, Canada’s third-biggest lender by assets, rose 0.8 percent to C$56.36.

To contact the reporter on this story; Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.

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