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Canadian Stocks Rise, Trimming First Monthly Decline Since May

Nov. 30 (Bloomberg) -- Canadian stocks erased losses in the final minutes of trading, paring the first monthly drop for the Standard & Poor’s/TSX Composite Index since May, before MSCI Inc. rebalanced its global indexes after a semi-annual review.

Dollarama Inc., the only Canadian stock added to the MSCI Canada Index, rallied 1.5 percent. Nexen Inc., which is awaiting approval of its sale to China’s Cnooc Ltd., rallied 4.9 percent to snap nine days of losses after Canadian Prime Minister Stephen Harper said the government will soon make decisions on foreign-investment guidelines.

The S&P/TSX rose 0.3 percent to 12,239.36 in Toronto, erasing an earlier decline of as much as 0.3 percent. The benchmark Canadian equity gauge retreated 1.5 percent for the month. Trading volume was 20 percent higher than the 30-day average.

“The activity both on the volume and movement side of the market today was as a result of the MSCI rebalance,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. His firm manages about C$220 million. “The reason these stocks go up is because there are so many funds that track it.”

MSCI Changes

Amendments to indexes can alter share prices as passively managed funds buy and sell stocks to mirror the benchmark indexes. Some $321.9 billion was invested in exchange-traded funds linked to MSCI indexes at the end of October, according to MSCI. About $3 trillion of funds are benchmarked against its indexes globally.

Dollarama, which added 1.5 percent to C$63.45, was added to the MSCI Canada Index, according to a statement from the index company. Fairfax Financial Holdings Ltd. lost 2.8 percent to C$343.94 and Precision Drilling Corp. added 2.2 percent to C$7.44 as the two stocks were removed.

Canada’s economic growth slowed to a 0.6 percent annualized pace in the third quarter as consumer spending gains were blunted by the fastest export decline since the end of the last recession and falling business investment. The gain in gross domestic product for July to September was the slowest in more than a year and short of analysts’ estimates, according to a survey by Bloomberg.

Financial stocks contributed the most to gains in the S&P/TSX as nine of 10 industries advanced. Talisman Energy dropped 3.2 percent to C$11.18 after Randy Ollenberger, an analyst with BMO Capital Markets, cut his rating on the oil and natural gas producer to market perform from outperform.

Mine Closure

Richmont Mines Inc. slumped 26 percent to C$2.82. The gold producer said it closed a mine and suspended exploration at another near Rouyn-Noranda, Quebec. The company cut its output forecast for next year.

Nexen added 4.9 percent to C$24.39. Canadian regulators are reviewing the sale of Calgary-based Nexen and an appeal of Petroliam Nasional Bhd.’s rejected C$5.2 billion ($5.24 billion) bid for Progress Energy Resources Corp.

Trilogy Energy Corp. rose 3.2 percent to C$28.64 and Bonterra Energy Corp. added 2.5 percent to C$44.02. Crude for January delivery rose 1 percent to settle at $88.91 for its first monthly gain since August.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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