Canadian stocks rose, sending the benchmark index to the highest level in almost six weeks, after Loblaw Cos. agreed to the biggest takeover of a Canadian retailer and existing home sales rose in June.
Loblaw jumped 5.4 percent afteragreeing to buy Shoppers Drug Mart Corp. for C$12.4 billion ($11.9 billion). Shoppers surged 24 percent to a record. Endeavor Silver Corp. added 12 percent as the company restated its second-quarter revenue higher. Catamaran Corp. gained 1.5 percent after ISI Group boosted its rating on the stock. Colossus Minerals Inc. plunged 50 percent after delaying gold output at a mine in Brazil.
The Standard & Poor’s/TSX Composite Index rose 66.17 points, or 0.5 percent, to 12,528.35 at 4 p.m. in Toronto, the highest since June 4. The benchmark gauge jumped 2.7 percent last week, its biggest five-day rally since November, to erase a loss for the year.
“The Loblaw deal put a good tone to everything and consumer stocks are all generally higher as a result,” said Bob Decker, fund manager with Aurion Capital Management in Toronto. He helps manage C$6 billion ($5.8 billion) at the firm. “The housing data is a testament to the resilience of the Canadian housing market and will continue to frustrate bearish commentators.”
Canadian existing home sales rose 3.3 percent in June, almost matching the previous month’s gain that was the fastest in more than two years, as the nation’s housing market defies predictions of a major correction. Recent data suggest the market for residential real estate, while moderating, remains robust.
China’s gross domestic product rose 7.5 percent in the April-to-June quarter from a year earlier. The pace was slower than the 7.7 percent in the first quarter and above the year-ago rate. Comments last week by China’s finance minister that 6.5 percent or 7 percent growth wouldn’t be a “big problem” raised concern the economy of Canada’s second-largest trading partner was cooling faster than estimated.
“It was good the China GDP number didn’t hit the more bearish whisper numbers that were out there,” Decker said. “It was not as bad as feared.”
Eight of the 10 industries in the S&P/TSX advanced, led by a 7 percent surge among producers of consumer staples. Trading volume was 24 percent lower than the 30-day average.
Loblaw, the country’s largest grocery operator by market value, surged 5.4 percent to C$50.13 for the biggest gain since December. The cash and stock deal for the country’s leading drugstore chain is the largest between two Canadian companies since Suncor Energy Inc. bought Petro-Canada in 2009. Shoppers surged 24 percent to C$60.12, helping consumer-staples stocks rise to a record as a group.
Health-care companies jumped 1.2 percent as a group. Catamaran added 1.5 percent to C$51.91 after an analyst at ISI Group boosted the stock to a strong buy with a price target of $62. Valeant Pharmaceuticals International Inc. gained 1.1 percent to C$97.69.
Endeavor Silver added 12 percent to C$3.77, pacing gains among producers of raw materials. The company revised its second-quarter sales result to $71.3 million, 12 percent higher than originally reported on July 10.
The silver and gold miner said part of the adjustment resulted from its understating realized prices for metals in certain sales. Endeavour is scheduled to report results Aug. 6.
Colossus Minerals plunged 50 percent to C$0.80, the lowest since December 2008. The company is delaying the start of gold production at its Serra Pelada mine venture in Brazil until the fourth quarter after some de-watering wells and pumps did not perform as expected. Stifel Nicholas analyst Craig Stanley downgraded the stock to hold from buy.