Canada Stocks Erase Losses as Telecom, Energy Shares Increase

March 26 (Bloomberg) -- Canadian stocks erased losses as better-than-estimated U.S. data boosted energy shares and telecommunication providers rallied, offsetting a drop in gold producers.

Rogers Communications Inc. rose 1.7 percent after saying it will expand its LTE wireless Internet network. Canadian Natural Resources Ltd. and ARC Resources Ltd. added at least 0.5 percent as oil jumped to a five-week high. AuRico Gold Inc. fell the most in six months after the company wrote down the value of a mine. Barrick Gold Corp. slid 1.1 percent as gold slumped for a third day.

The Standard & Poor’s/TSX Composite Index rose 25.67 points, or 0.2 percent, to 12,706.38 at 4 p.m. in Toronto after falling as much as 0.2 percent. The S&P/TSX is up 2.2 percent this year. Trading volume was 26 percent lower than the 30-day average.

“To the extent we can see continued improvement in the U.S. economy, eventually the Canadian market will come along,” Laura Wallace, Toronto-based vice president and portfolio manager for Scotia Asset Management, said in a phone interview today. She helps manage about C$11 billion ($11 billion). “We need to see sustained recovery in the U.S., which will firm up commodity prices.”

U.S. economic data released today bolstered optimism about the world’s largest economy. Orders for durable goods climbed more than forecast in February and residential real estate prices increased in January by the most since 2006.

Rogers, BCE

Telecommunication firms rose the most in the S&P/TSX, adding 1.3 percent as a group. Rogers Communications, Canada’s largest wireless carrier, rose 1.7 percent to C$51.43. The company said it would expand its high-speed cellular Internet system into 44 new markets this spring. BCE Inc., the nation’s biggest phone company, climbed 1.7 percent to C$47.31.

Energy shares advanced, as oil jumped 1.6 percent to $96.34, the highest settlement since Feb. 19. Canadian Natural Resources added 0.5 percent to C$33.08 and ARC Resources climbed 1 percent to C$26.63.

Just Energy Group Inc. rallied 9.9 percent to C$6.79 after its executive chairman said the natural gas and power supplier does not plan additional dividend cuts. The stock slid 14 percent over the previous four days.

“We recognize there are rumors in the market regarding a further dividend reduction,” Rebecca MacDonald said in a statement yesterday. “At this point we do not expect any further changes to our dividend payout.”

The Toronto-based company cut its quarterly dividend to 7 Canadian cents a share from 10 cents a share on Feb. 7.

Banks Rise

Financial shares increased after Canada’s government said the country’s six largest banks are “systemically important” and need to set aside more capital. The Office of the Superintendent of Financial Institutions, the country’s banking regulator, said the banks will be subject to a surcharge equal to 1 percent of risk weighted capital by Jan. 1, 2016.

Each bank will also have to hold debt that can be converted to capital if it fails, reducing the need for a taxpayer-funded bailout. Canadian banks have been ranked the world’s soundest for the past five years by the World Economic Forum.

“Investors are giving banks the benefit of the doubt and reasonably so,” said John O’Connell, chief executive officer with Davis Rea Ltd., which manages about C$600 million, in Toronto. “It wasn’t a surprise. They’re clearly in great shape, so nobody’s really worried about these banks.”

Royal Bank of Canada, the nation’s largest lender, added 0.5 percent to C$61.48 and Toronto-Dominion Bank rose 0.6 percent to C$84.68.

Limited Offer

Bank of Montreal, Canada’s fourth-largest bank, gained 0.8 percent to C$64.19 after the company raised its five-year mortgage rate to 3.09 percent. A reduction earlier this month drew criticism from Finance Minister Jim Flaherty. The bank’s 2.99 percent rate was a “limited time offer,” and expires March 28, the bank said in a statement today.

Raw-materials stocks fell 0.7 percent as a group, the only one of 10 industries in the S&P/TSX to retreat. Gold futures for June delivery declined 0.6 percent to settle at $1,597.30 an ounce. The metal has lost 4.7 percent this year.

AuRico Gold slid 7.8 percent to C$6.23 for its biggest slide since September after the company wrote down the value of its El Chanate mine in Mexico by $127 million. Fourth-quarter revenue of $63.1 million was lower than the $71.3 million average of three analysts’ estimates compiled by Bloomberg.

Barrick Gold, the world’s largest gold producer, lost 1.1 percent to C$29.32. Founder and Co-Chairman Peter Munk said yesterday he and his directors have been considering “new leadership” for the board.

To contact the reporters on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net; Eric Lam in Toronto at elam87@bloomberg.net

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