Canadian Stocks Gain Most in Three Months as Bank Shares Advance

Canadian stocks rose the most in three months, led by gains among banks, after a measure showing an increase in German investor confidence added to signs of a European economic recovery.

Royal Bank of Canada, the nation’s largest lender, surged 1.8 percent. Bank of Nova Scotia and Toronto-Dominion Bank rose at least 1.1 percent. Suncor Energy Inc., Canada’s largest energy producer, gained 1.2 percent as the price of crude rallied. Great-West Lifeco Inc. added 2.4 percent after agreeing to acquire Irish Life Group Ltd. Atlantic Power Corp. slid 3.6 percent after an analyst with RBC Capital Markets said the company may lower its dividend.

The Standard & Poor’s/TSX Composite Index rose 123.58 points, or 1 percent, to 12,810.21 in Toronto for the biggest gain since Nov. 19. The S&P/TSX has risen 3 percent for 2013. Canadian markets were closed yesterday for the Family Day holiday.

“Financials are rebounding with the positive news worldwide with the German investor confidence number and a Canadian company willing to make an acquisition in Ireland,” Anish Chopra, managing director and fund manager with TD Asset Management Ltd., said on the phone from Toronto. His firm manages about C$204 billion ($201.5 billion). “It all bodes well for banking institutions in Canada.”

Investor confidence in Germany, Europe’s largest economy, jumped in February to 48.2 from 31.5 in January, the ZEW Center for European Economic Research in Mannheim said. That’s more than economists forecast and the highest level since April 2010.

Great-West added 65 Canadian cents to C$27.43. Canada’s second-largest insurer agreed to acquire Irish Life from Ireland’s government for C$1.75 billion as it seeks to expand European operations.

Financial Shares

Banks and energy stocks contributed most to gains in the S&P/TSX as nine of 10 industries advanced. Trading volume was in line with the 30-day average.

The S&P/TSX Financials Index rose 1.3 percent to 1,844.15 points, its highest level since December 2007. Royal Bank gained 1.8 percent to C$64.43, an all-time high. TD Bank advanced 1.3 percent to C$83.84. Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce added at least 0.9 percent.

“We’re also getting a rally in the safety sectors of the pipelines, utilities and telecoms. Investors seem to be gravitating to high-quality, dividend-paying equities,” Chopra said.

Enbridge Inc. gained 1 percent to C$44.81 and TransCanada Corp. added 1.3 percent to C$47.39. Rogers Communications Inc., Canada’s largest wireless carrier, jumped 2.5 percent to C$48.49. Telus Corp. rose 2.2 percent to C$69.32.

National Railway

Canadian National Railway Co. increased 0.7 percent to C$101.50. The Montreal-based railway named Jim Vena, 54, its new chief operating officer after Keith Creel left earlier this month to be president and COO of rival Canadian Pacific Railway Ltd.

Suncor climbed 38 Canadian cents to C$32.13, its biggest gain in more than two weeks. Cenovus Energy Inc. advanced 1.8 percent to C$32.76. Crude for March delivery, which expires tomorrow, added 0.8 percent to settle at $96.66 a barrel in New York.

Atlantic Power, based in Boston, lost 42 Canadian cents to C$11.17 after Nelson Ng, analyst with RBC Capital Markets, said the company may lower its dividend by at least 30 percent after it reports its fourth-quarter earnings results on Feb. 28.

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