Canada Stocks Erase Losses as U.S. House Plans Dec. 30 Session

Canadian stocks erased earlier losses in the final hour of trading as the U.S. House of Representatives planned a session on Dec. 30 in an attempt at resolving a budget impasse before the new year.

Research In Motion Ltd., which will begin selling its BlackBerry 10 line of smartphones early next year, jumped 11 percent to rebound from a post-earnings plunge last week. Barrick Gold Corp. and Goldcorp Inc. rose at least 1.3 percent as the price of the metal erased earlier declines. Poseidon Concepts Corp. plunged 54 percent after the oil and gas services company suspended future dividends and formed a committee to review its business processes.

The Standard & Poor’s/TSX Composite Index rose 2.97 points, or less than 0.1 percent, to 12,373.77 in Toronto, reversing earlier losses of as much as 0.7 percent. The equity gauge has gained 3.5 percent this year. The Canadian market was closed on Dec. 25 and 26 for the Christmas and Boxing Day holidays.

“It’s all about what’s happening in Washington,” said Michael O’Brien, director and fund manager with TD Asset Management, said from Toronto. His firm manages about C$204 billion ($205 billion). “The underlying impulse is people want to take the market higher. If we can get the politicians out of the way things should be pretty good in 2013.”

The U.S. House will convene the evening of Dec. 30, Majority Leader Eric Cantor said today in a message posted on Twitter. U.S. lawmakers are seeking to avoid more than $600 billion in spending cuts and tax increases that are days away from taking effect. Failure to avert the fiscal cliff will probably send the U.S. into a recession in the first half of the year, according to the Congressional Budget Office.

Raw Materials

Raw materials stocks contributed the most to gains in the S&P/TSX as five of 10 industries advanced. Trading volume was 24 percent lower than the 30-day average.

Barrick added 2.2 percent to C$34.24 and Goldcorp rose 1.3 percent to C$35.98. Gold for February delivery advanced 0.2 percent to settle at $1,663.70 an ounce in New York, erasing earlier losses of as much as 0.5 percent after U.S. Senate Majority Leader Harry Reid said the budget dispute probably won’t be resolved before Jan. 1.

RIM, based in Waterloo, Ontario, jumped 11 percent to C$11.70. The shares tumbled 27 percent on Dec. 21, the day after Chief Executive Officer Thorsten Heins said in an earnings call that lower-end users will generate “less or no service revenue” in the future, a move that affects RIM’s most profitable source of revenue.

RIM Rebounds

Investors may have overestimated the impact of the change on earnings per share, Kevin Smithen, an analyst at Macquarie Securities USA Inc. in New York, said yesterday. The smartphone maker gained 11 percent in trading in New York yesterday, while the Canadian market was closed.

Royal Bank of Canada and Toronto-Dominion Bank, the nation’s two largest lenders, retreated 0.5 percent to C$60.05 and 0.9 percent to C$83.27, respectively.

Poseidon, a Calgary-based company that sells fluid storage tanks for the oil and gas industry, tumbled 54 percent to C$1.48. The company said it is forming a special committee to review recent writedowns on accounts it is owed, and warned there may be further “significant” writedowns in the future.

Poseidon suspended its future dividends, effective Jan. 16, pending the committee’s review. The company also shuffled its management and board, assigning A. Scott Dawson as interim president and chief executive officer.

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