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Canadian Stocks Rise as U.S. Housing Starts Climb, Gold Gains

Canadian stocks gained the most this month, led by gold and energy producers, after housing starts in the U.S. advanced to the highest level since April 2010 and an index of German business confidence rose.

Barrick Gold Corp., the world’s largest producer of the metal, increased 2.5 percent as the U.S. Dollar Index fell the most this month. Canadian Natural Resources Ltd., the country’s second-largest energy company by market value, climbed 3.3 percent as oil and gas futures rose. Teck Resources Ltd., Canada’s largest base-metals and coal producer, rallied 4.2 percent as copper gained.

The Standard & Poor’s/TSX Composite Index advanced 177.18 points, or 1.5 percent, the most since Nov. 30, to 11,716.88.

“The housing starts out of the U.S. were surprisingly good,” Greg Taylor, a money manager at Aurion Capital Management in Toronto, said in a telephone interview. The firm oversees about C$5 billion ($4.9 billion). “It just shows the North American economy is doing way better than the North American stock market.”

The S&P/TSX has slumped 13 percent this year as raw-materials and energy producers dropped on concern the European debt crisis will weaken the global economy. The index is set to trail the S&P 500 for the first year since 2003.

U.S. housing starts increased 9.3 percent to a 685,000 annual rate in November, the Commerce Department said today in Washington. The 79 economist forecasts in a Bloomberg survey ranged from 600,000 to 655,000.

Banking ‘Comfort’

“This is where the problems started three or four years ago: U.S. housing,” Taylor said. “If you can see that stabilize or turn around, that’s comfort for the U.S. banking system, which shows we’re actually starting to fix the initial problem.”

The Ifo institute’s monthly business climate index rose, the Munich-based organization said today. Most economists in a Bloomberg survey had forecast a decline from November’s reading.

The yield on the benchmark 10-year Spanish government bond declined to a two-month low after the country sold more in three- and six-month bills than its maximum target today.

Gold futures advanced and the S&P/TSX Materials Index rebounded from the lowest close since August 2010 as the U.S. dollar retreated against all 16 other major currencies. Barrick increased 2.5 percent to C$47.45. Goldcorp Inc., the world’s second-largest gold producer by market value, climbed 1.6 percent to C$46.88. China Gold International Resources Corp. jumped 17 percent, the most since May 2010, to C$2.41, a day after releasing drilling results.

San Gold Corp., which mines in Manitoba, surged 41 percent, the most since November 2003, to C$1.94 after reporting drilling results from what it called “one of the richest gold deposits ever discovered in Manitoba” in a statement. The shares closed at the lowest since January 2009 yesterday.

Energy Shares

Crude oil futures rose the most since Oct. 27 and natural gas rebounded from a 27-month low on the New York Mercantile Exchange. Canadian Natural gained 3.3 percent to C$36.26. Suncor Energy Inc., the country’s biggest energy company, advanced 1.8 percent to C$28.01. Niko Resources Ltd., which produces oil and gas in South Asia, soared 6 percent to C$46.07.

All major base metals traded on the London Metal Exchange climbed and copper also rose on the Comex in New York. Teck increased 4.2 percent to C$35.65. First Quantum Minerals Ltd., Canada’s second-largest publicly traded copper producer, gained 4.5 percent to C$19.10. Lundin Mining Corp., which produces base metals in Europe, rallied 5.2 percent to C$3.88 in Toronto Stock Exchange trading.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, increased 3.9 percent to C$41.52 as corn futures advanced to the highest settlement level since Nov. 30.

The five biggest banks in the S&P/TSX climbed. Royal Bank of Canada, the country’s biggest lender by assets, rose 0.9 percent to C$49.13. Canadian Imperial Bank of Commerce, the fifth-largest lender in Canada, gained 1.3 percent to C$73.35. Insurance holding company Fairfax Financial Holdings Ltd. advanced 2.3 percent to C$427.50.

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