Canadian Stocks Rise as Gold Producers Rally on Stimulus Bets

Canadian stocks advanced as gold producers climbed on rising bullion prices, offsetting losses among lenders after Royal Bank of Canada reported weaker-than-estimated earnings.

Detour Gold Corp. and Barrick Gold Corp. jumped at least 6.9 percent as the metal touched a two-week high on speculation the U.S. central bank will maintain its bond-purchasing program. Royal Bank slid 1.8 percent after earnings trailed analysts’ forecasts. Talisman Energy Inc. advanced 1.5 percent after saying it may reduce its stake in some properties.

The Standard & Poor’s/TSX Composite Index rose 13.94 points, or 0.1 percent, to 12,746.55 at 4 p.m. in Toronto, erasing earlier losses of as much as 0.1 percent. The index has gained 2.5 percent this year. Trading volume was 11 percent higher than the 30-day average.

“Gold has sparked a nice couple-day comeback,” Barry Schwartz, fund manager with Baskin Financial Services Inc., said from Toronto. He helps manage C$500 million ($485 million) with the firm. “It’s not a no-growth or negative growth environment, which is how they are being priced,” he said, referring to bank earnings. “They’re being priced as if we’re headed into some kind of nasty, negative downturn.”

Demand for gold as a store of value increased on speculation the U.S. Federal Reserve will maintain the pace of stimulus after data today showed the world’s largest economy expanded less than previously estimated and jobless claims grew more than forecast. The Fed has said it could slow its $85 billion of monthly debt purchases if the economy shows sustained improvement.

Miners Rally

Raw-materials producers in Canada paced gains in the S&P/TSX, rising 3.3 percent as a group to a seven-week high.

Detour Gold advanced 6.9 percent to C$10.69 and Barrick Gold, the world’s largest producer of the metal, jumped 7 percent to C$21.91, the highest in six weeks. Gold futures rose 1.5 percent to settle at $1,412 an ounce in New York, the biggest gain since May 23. Earlier, the precious metal jumped to $1,471.70, the highest since May 15.

Silvercorp Metals Inc. advanced 6.3 percent to C$3.21 and Silver Standard Resources Inc. rallied 6.2 percent to C$8.36 as the metal rose 1.1 percent to $22.69 an ounce.

Talisman Energy added 1.5 percent to C$12.35 after CEO Hal Kvisle said at a conference in New York the company may reduce its stakes in Kurdistan and in the North Sea. Foreign buyers would prefer joint ventures on its Duvernay shale assets in western Canada, Kvisle said.

Athabasca Oil Corp. jumped 8.8 percent to C$6.93 and Niko Resources Ltd. surged 10 percent to C$9.28 as crude rose 0.5 percent to settle at $93.61 a barrel in New York.

Royal Bank slumped 1.8 percent to C$62.84, the biggest loss in five weeks, after reporting second-quarter adjusted earnings of $1.31 a share, short of the C$1.32 average estimate of 12 analysts surveyed by Bloomberg.

The Bank of Montreal, Toronto-Dominion Bank and Bank of Nova Scotia have all reported earnings in the past week that have fallen short of analysts’ estimates.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE