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Canada Stocks Rise as Obama Says U.S. Budget Deal ‘Within Sight’

Dec. 31 (Bloomberg) -- Canadian stocks rose, extending the annual gain for the benchmark index, as U.S. President Barack Obama said that a budget deal to avoid the so-called fiscal cliff is “within sight” though not yet done.

Barrick Gold Corp. and Goldcorp Inc., the world’s two largest producers of the metal, rose at least 2.8 percent as the price of gold posted a 12th straight annual gain. Teck Resources Ltd., Canada’s largest diversified miner, gained 3.1 percent after China’s manufacturing expanded at the fastest pace in 19 months. First Quantum Minerals Ltd. climbed 3.4 percent as copper rose to a third annual gain in four years.

The Standard & Poor’s/TSX Composite Index rose 117.41 points, or 1 percent, to 12,433.53 in Toronto. The equity gauge gained 4 percent for the year, trailing the performance of markets in every developed nation except Spain and Portugal.

“People are fixated on the fiscal cliff,” said Bob Decker, fund manager with Aurion Capital in Toronto. The firm manages about C$5.5 billion ($5.52 billion). “You can’t be too bearish in case there is a deal, so that prevents a wholesale selloff in the market.”

Senate Minority Leader Mitch McConnell said on the Senate floor today that lawmakers in Congress are “very, very close” to a deal, urging passage of “the tax-relief portion” of a budget agreement that would continue lower tax rates for all but the highest earners. Obama, speaking at the White House, said the main sticking point was how to avoid the automatic federal spending cuts set to begin tomorrow.

Lawmakers are seeking to avoid more than $600 billion in spending cuts and tax increases that will kick in at midnight. Failure to avert the so-called 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 and energy stocks contributed most to gains in the S&P/TSX as nine of 10 industries advanced. Trading volume was 48 percent lower than the 30-day average.

Barrick added 2.8 percent to C$34.82 and Goldcorp rose 3.2 percent to C$36.57 as gold for February delivery advanced 1.2 percent to settle at $1,675.80 an ounce in New York. The metal gained 7 percent this year.

Teck Resources, which produces metallurgical coal as well as base metals, rose 3.1 percent to C$36.15. The final reading of a Purchasing Managers’ Index in China for December was 51.5 according to a statement from HSBC Holdings Plc and Markit Economics, ahead of a 50.9 preliminary reading on Dec. 14. A level above 50 indicates expansion.

First Quantum gained 3.4 percent to C$21.91 and Inmet Mining Corp. increased 0.8 percent to C$74.01 as copper for March delivery added 1.8 percent to settle at $3.6525 a pound in New York. The price of the metal climbed 6.3 percent in 2012.

Potash, Agrium

Potash Corp. of Saskatchewan Inc. rose 1.9 percent to C$40.48 and Agrium Inc. gained 1.4 percent to C$99.14. Canpotex Ltd., the marketing company that represents North American potash producers Potash Corp., Agrium and Mosaic Co., said today the companies will sell 1 million metric tons of the fertilizer to China’s Sinofert Holdings Ltd. in the first half of 2013 for $70 a ton less than the price established in March.

Suncor Energy Inc., Canada’s largest oil producer, advanced 1.5 percent to C$32.71 and Canadian Natural Resources Inc. rose 0.9 percent to C$28.64 as crude for February delivery climbed 1 percent to settle at $91.82 a barrel in New York, the highest since Oct. 18. Crude slumped 7.1 percent this year.

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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