Canadian stocks rose to a three-week high, led by commodity producers, as investors speculated that the European Union will increase the size of its bailout fund and Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to reduce U.S. unemployment.
San Gold Corp., the developer of a project in Manitoba, advanced 6.4 percent. Yamana Gold Inc., Canada’s third-largest producer by market value, gained 1.5 percent. Suncor Energy Inc., Canada’s largest oil and gas producer, rose 1 percent, as oil erased an earlier loss after Bernanke’s comments. Fortuna Silver Mines Inc., which operates in Peru and Mexico, plunged 9.2 percent after it reported a fourth-quarter loss.
The Standard & Poor’s/TSX Composite Index advanced 109.13 points, or 0.9 percent, to 12,574.79 in Toronto.
“Commodities have clearly been pushing the market higher,” Brian Huen, a managing partner at Red Sky Capital Management Ltd. in Toronto, said in a telephone interview. The firm oversees about C$55 million ($55 million). “You’re seeing oil prices firm up and you’re seeing a rally in gold today. The rally in gold is mainly driven by Bernanke’s comments that the job market in the U.S. isn’t recovering as quickly as he’d like it to.”
The index slipped 0.3 percent last week as manufacturing contracted in China and Europe and gold fell to a 10-week low before rebounding on March 23. Energy and raw-materials companies make up 45 percent of Canadian stocks by market value, according to Bloomberg data.
Materials stocks in the S&P/TSX gained after Bernanke said that while he’s encouraged by the unemployment rate’s drop to 8.3 percent, further improvement in the job market will require continuing the central bank’s stimulative monetary policies.
Commodities also increased after Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel. European finance ministers will meet on March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall.
San Gold advanced 6.4 percent to C$1.50. Yamana Gold gained 1.5 percent C$16.16. Suncor advanced 1 percent to C$33.12.
Fortuna Silver Mines dropped 9.2 percent to C$5.60 after reporting a fourth-quarter loss of $1.2 million. Excluding some items, the company broke even, missing the the 8.4 cent average of analyst estimates in a Bloomberg survey. The results were hurt by higher tax rates in Peru, Trevor Turnbull, an analyst at Bank of Nova Scotia, said in a telephone interview.
Financial stocks in the S&P/TSX rose. Royal Bank of Canada, the country’s largest lender by assets, advanced 1.2 percent to C$58.67. Industrial Alliance Insurance & Financial Services Inc. increased 2.5 percent to C$31.10.
“This market strength could last for a little while longer,” said Huen. “The Canadian markets have lagged the U.S. markets year-to-date, so you could see a bit of a catch-up.”
SNC-Lavalin Group Inc., Canada’s largest engineering and construction company, rose 5.2 percent to C$41.31, reversing an earlier loss prompted by the resignation of Pierre Duhaime as the company’s chief executive officer after a probe into project payments.
The discovery of incorrectly booked payments does not appear to have caused the loss of any contracts, company executives said in a statement today. SNC-Lavalin isn’t planning legal action against Duhaime, Chairman Gwyn Morgan said on a conference call.