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Canadian Stocks Outperform U.S. Most Since ‘Black Monday’

Canadian stocks rose, outperforming their U.S. peers by the most since October 1987, as gold producers rallied amid concern that the U.S. economic recovery is stalling and Europe won’t be able to contain its debt crisis.

Barrick Gold Corp., the world’s largest producer, rose 6.2 percent as the precious metal climbed to a record. Crude oil surged to its biggest one-day gain in three months in New York amid speculation the Federal Reserve will buy more assets to bolster the economy. Manulife Financial Corp. fell 5.2 percent the day before the insurer is scheduled to report earnings.

The Standard & Poor’s/TSX Composite Index rose 89.63 points, or 0.7 percent, to 12,198.89 at 4:10 p.m. in Toronto. The Canadian equity benchmark beat the S&P 500 index by 5.16 percentage points, the most since the day known as Black Monday, Bloomberg data show. The figures don’t include days after one of the markets was closed. Energy and raw material companies make up 48 percent of Canadian stocks by market value.

“Investors are looking more at oil and gold and decided to buy stocks that are basic materials-related,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. Fin-XO Securities oversees C$600 million ($620 million). “The perception is the gold is going up, oil is going up, so resources are doing well.”

The S&P/TSX rallied the most since May 2009 yesterday after the U.S. Federal Reserve pledged to keep its interest rate at a record low. Policy makers said they were prepared to use a range of tools to boost the economy that is “considerably slower” than expected. The S&P cut the U.S. credit rating for the first time on Aug. 5.

Debt Crisis

The cost of insuring French debt rose to a record today as Europe’s debt crisis made investors wary of lending to any nation other than Germany. The European Central Bank bought Italian and Spanish bonds for a third day as it tried to halt a market rout.

The S&P/TSX financial stock index fell 1.1 percent after rising the most since May 2009 yesterday. Toronto-Dominion Bank, Canada’s second-largest lender by assets, declined 1.5 percent to C$73.93 in Toronto trading. Royal Bank of Canada, the country’s biggest bank, declined 1 percent to C$49.73. A gauge of financial stocks in the Standard and Poor’s 500 Index fell 7.1 percent.

“Either the financials are reacting a little too much in the U.S. or in Canada, people aren’t paying enough attention to what’s happening internationally,” Gauthier said.

Earnings Tomorrow

Manulife Financial, North America’s fourth-largest insurer, retreated 5.2 percent to C$12.50, the lowest price since Oct. 15. Macquarie Capital Markets Canada Ltd.’s Sumit Malhotra said in a note dated today that the company’s second-quarter earnings report “won’t be great” and that the company will have a loss in the third quarter. Manulife discloses results tomorrow.

Gold rose as high as $1,801 an ounce as the S&P/TSX gold stock index surged the most since February 2010. Goldcorp Inc., the world’s second-largest producer of the metal, advanced 6.5 percent to C$50.31. Barrick rose 6.2 percent to C$49.72 in Toronto trading.

Yamana Gold Inc., the country’s fourth-largest producer, gained 7.3 percent, the most since November 2009, to C$14.86. Agnico-Eagle Mines Ltd. advanced 5.2 percent to C$62.48. Canada’s fifth-largest gold producer rose for a fourth day, the longest streak of gains since May 30.

Molybdenum producer Thompson Creek Metals Co. slumped 4.5 percent to C$7.45 after soaring 12 percent yesterday.

Silver gained 3.8 percent. First Majestic Silver Corp., which mines in Mexico, climbed 12 percent to $21.22, its biggest gain since April.

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