Canadian Stocks Cap Fifth-Straight Weekly Climb as Banks Rise

Canadian stocks rose, completing a fifth-straight weekly gain, as financial companies advanced after the country reported slower inflation.

Royal Bank of Canada, the country’s largest lender by assets, climbed 1.4 percent after the country reported prices climbed less in 2011 than all 23 economists in a Bloomberg survey had forecast. First Quantum Minerals Ltd., Canada’s second-biggest publicly traded copper producer, decreased 5.7 percent after a private report indicated manufacturing contracted in China.

The S&P/TSX Composite Index increased 16.41 points, or 0.1 percent, to 12,397.10, extending the weekly gain to 1.4 percent.

“All of the news in terms of inflation under control, the general economy getting better, that erases the pressure of lower margins for the banks,” Marcus Xu, director of equity investments at Genus Capital Management in Vancouver, said in a telephone interview. The firm oversees about C$1.7 billion ($1.7 billion).

The S&P/TSX has posted the longest streak of weekly gains since October 2010 as data have shown stronger employment and manufacturing in the U.S. Seventy-five percent of Canada’s exports went to the U.S. in 2010, according to Statistics Canada.

Banks Rally

The S&P/TSX Financials Index rose for a fifth day, the longest streak since July, after Statistics Canada said the country’s year-over-year inflation rate slowed to 2.3 percent in December from 2.9 percent in November. The Canadian dollar fell for the first time this week against the U.S. currency.

Royal Bank increased 1.4 percent to C$53.85. Toronto-Dominion Bank, the country’s second-largest lender by assets, advanced 1.2 percent to C$79.15. Manulife Financial Corp., North America’s fourth-biggest insurer, climbed 2.6 percent to C$12.65 capping its fifth-straight weekly gain.

A purchasing managers’ index released by HSBC Holdings Plc and Markit Economics indicated manufacturing contracted for a third month in China, the world’s largest user of industrial metals. Copper futures fell for the first time this week on the Comex in New York.

Base-Metals Producers

Base-metals and coal producers in the S&P/TSX retreated the most this month. First Quantum slumped 5.7 percent to C$22.55. Lundin Mining Corp., which produces base metals in Europe, declined 4 percent to C$5.09.

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, decreased 1.8 percent to C$45.28 after Lindsay Drucker Mann, an analyst at Goldman Sachs Group Inc., said a proposed reduction in Indian subsidies may hurt the company. The country’s government plans to reduce payments for potash and phosphorus fertilizers because prices of the nutrients may decline, Hindu Business Line reported Jan. 18 without citing anyone.

B2Gold Corp., which mines in Nicaragua, surged 6.5 percent to C$3.28 after reporting drilling results from its Primavera project.

Niko Resources Ltd., which produces oil and gas in South Asia, rose 5.3 percent to C$53.37 extend its three-day rally to 13 percent. The company said Jan. 17 it signed a $250 million credit facility with Royal Bank and Bank of Nova Scotia.

New Zealand Energy Corp., which explores for oil and gas in that country, soared 18 percent to C$1.71 after Bill Newman, an analyst at Mackie Research Capital Corp., began coverage of the Vancouver-based company with a “speculative buy” rating. The closing price was the highest since the company’s initial public offering in August.

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