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Canadian Stocks Rise as Report Shows Rebound in U.S. Employment

Updated on

July 7 (Bloomberg) -- Canadian stocks rose for the seventh time in eight days, led by energy companies, as crude oil futures advanced to a three-week high after U.S. employment reports bolstered confidence in the economy.

Suncor Energy Inc., Canada’s largest oil and gas producer, gained 1.5 percent as crude futures rose 2.1 percent after ADP Employer Services said U.S. payrolls increased last month by more than twice the amount forecast by economists. Metals explorer European Goldfields Ltd. surged 11 percent after Greece said it will decide on the company’s mine-permit application within a month. Telecommunication shares retreated from their highest valuations relative to earnings since 2008.

The Standard & Poor’s/TSX Composite Index rose 2.9 points, or less than 0.1 percent, to 13,406. The index had gained as much as 0.5 percent before erasing most of its gains in the last hour of trading.

“Oil prices reflect a perceived better environment” economically, said Greg Eckel, a money manager at Morgan Meighen & Associates Ltd. in Toronto, which oversees about C$1 billion ($1.04 billion). “Today, you had a decent ADP jobs report, and you’ve got a lot of estimates of a better second half.”

The stock benchmark fell for the first time in seven days yesterday, trimming its gain since June 24 to 3.8 percent. The S&P/TSX has rallied as European leaders took action to prevent a Greek default and a gauge of U.S. manufacturing surpassed economists’ forecasts.

Employment Data

U.S. payrolls increased by 157,000 jobs last month, according to ADP, a unit of Roseland, New Jersey-based Automatic Data Processing Inc. Jobless claims fell by 14,000 to 418,000 in the week ended July 2, U.S. Labor Department figures showed. The median forecast of economists in a Bloomberg News survey called for a drop to 420,000.

Crude oil extended its weekly climb to 3.8 percent in New York. Suncor rose 1.5 percent to C$39.22. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, gained 1.3 percent to C$41.67. Cenovus Energy Inc., Canada’s No. 5 company in the industry, advanced 3 percent to C$36.60.

Oil-sands developer BlackPearl Resources Inc. increased 5 percent to C$6.93 after Steve Toth, an analyst at Canaccord Financial Inc., raised his rating on the stock to “buy” from “hold.” In a note to clients, Toth cited the shares’ 23 percent plunge from Feb. 15 to yesterday.

European Goldfields jumped 11 percent to C$12.31, extending its three-day gain to 22 percent. Greece will make an announcement within a month on the permitting on the company’s projects in the country, George Papaconstantinou, the minister of environment, energy and climate change, said at a presentation in Athens today.

Valuation High

Telecommunication companies declined after reaching their highest price relative to earnings since August 2008 yesterday. The industry has ranked second in gains this year among 10 groups in the S&P/TSX as low interest rates and bond yields have encouraged investors to buy stocks that pay higher-than-average dividends.

“People do realize rates at some point have to go up,” Eckel said. “Valuations may be stressed at this point.”

Rogers Communications Inc., Canada’s largest wireless carrier, lost 2.1 percent to C$37.90. BCE Inc., the country’s biggest phone company, decreased 1.4 percent to C$37.84.

TransCanada Corp., a pipeline company that pays a dividend yield of 4 percent, retreated 2 percent to C$40.75. The company’s Keystone XL project may face delays as long as two years because of landowners’ opposition, Bloomberg News reported today.

BlackBerry maker Research In Motion Ltd. rallied 4 percent to C$27.87 after saying it has added 1 million new subscribers in Europe, the Middle East and Africa in less than three weeks. The company made the statement on Twitter.

To contact the reporter on this story: Matt Walcoff at Mwalcoff1@bloomberg.net

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

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