Canadian Stocks Rise as China, U.S. Data Offset Factory Sales

Canadian stocks climbed, extending their gain for the week, as optimism about the global economy fueled by American and Chinese manufacturing reports offset a slump in factory sales and concern about U.S. budget talks.

Dundee Corp. surged 14 percent after the company said it will give shareholders a 50 percent stake in Dundee Real Estate Investment Trust, its 70 percent-owned real-estate unit. China Gold International Resources Corp. declined 5.8 percent as the precious metal dropped for a third straight week. Encana Corp. slipped 4.3 percent a day after PetroChina Co. agreed to pay C$1.18 billion ($1.2 billion) for a 49.9 percent stake in an Alberta shale formation.

The Standard & Poor’s/TSX Composite Index rose 7.55 points, or 0.1 percent, to 12,296.72. The equity gauge gained 1.1 percent for the week and is up 2.9 percent this year.

“You’ve got some positive impulses and some negative impulses, so we’re stabilizing and we’ll see more stabilization later,” Robert “Hap” Sneddon, president of Castlemoore Inc. in Oakville, Ontario, said in a phone interview. “We had a little bit of a positive with Harper allowing two sovereign deals to go through in the oils.”

Industrial production in the U.S. rose in November by the most in two years. In China, the December preliminary reading was 50.9 for a purchasing managers’ index released by HSBC Holdings Plc and Markit Economics, beating estimates.

Canadian factory sales fell faster than economists forecast in October on declines in aircraft and automobiles, while inventories reached the highest in almost four years.

Budget Talks

President Barack Obama and Republican House Speaker John Boehner remained deadlocked yesterday during their third White House meeting on next year’s budget. Canadian Finance Minister Jim Flaherty said today that Canada would enter a recession if U.S. policy makers are unable to reach an agreement to avoid fiscal tightening scheduled for January.

“There is good reason for concern in the next quarter or so if that issue is not resolved satisfactorily,” Flaherty told reporters today in Ottawa.

Encana fell 4.3 percent to $19.96, after jumping 2 percent yesterday. PetroChina’s deal marks the first between Canada and a state-owned company since Canadian Prime Minister Stephen Harper unveiled new foreign investment rules on Dec. 7.

‘Exceptional Circumstances’

The rules, announced after the approval of Cnooc Ltd.’s purchase of Nexen Inc., prohibit state-owned enterprises from taking control of Canadian oil-sands businesses unless there are “exceptional circumstances.” Joint ventures and minority stake acquisitions aren’t barred under the rules.

China Gold fell 5.8 percent to C$3.41. Gold futures for February delivery rose 20 cents to settle at $1,697 an ounce in New York. The metal was down 0.5 percent this week.

Dundee rallied 14 percent to C$30.47 after its board approved a tax-efficient plan to give shareholders a 50 percent stake in Dundee Realty Corp.

Inmet Mining Corp., the target of a proposed takeover offer from First Quantum Minerals Ltd., climbed 4.7 percent to C$69.83 after the miner boosted the copper resource estimate at its Cobre Panama project by 27 percent.