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Canadian Stocks Rise as Telecom, Banks Gain Amid Taper

Aug. 29 (Bloomberg) -- Canadian stocks rose for a second day, as bank shares advanced on better-than-estimated earnings and phone companies rallied on dimmed prospects of competition from U.S.-based Verizon Communications Inc.

Royal Bank of Canada and Toronto-Dominion Bank gained at least 1.2 percent after raising their dividends and posting third-quarter earnings that beat analysts’ estimates. Rogers Communications Inc. surged 3 percent to lead phone stocks higher. Dundee Precious Metals Inc. jumped 10 percent after suggesting it may expand a gold and silver mine in Armenia.

The Standard & Poor’s/TSX Composite Index rose 97.51 points, or 0.8 percent, to 12,704.73 at 4 p.m. in Toronto. The gauge added 0.1 percent yesterday and has gained 1.8 percent this month.

“Given that so many people own Canadian banks, it’s good news and that will set the tone on the macro for Canadian equity markets,” Irwin Michael, portfolio manager with ABC Funds in Toronto, said in a phone interview. His firm manages C$800 million ($774 million). “With the higher U.S. GDP, it gives us more comfort that the economy is slowly but surely improving.”

Investors are weighing data that showed the U.S. economy grew by more than expected in the second quarter and that claims for unemployment benefits declined last week. The U.S. is Canada’s biggest trading partner.

Eight of 10 industries in the S&P/TSX rose, with phone, bank and health-care stocks rising at least 1.2 percent. Trading volume in the benchmark gauge was 4.6 percent below the 30-day average.

Bank Rally

The S&P/TSX Commercial Bank Index jumped 1.6 percent to a record high, as all eight members increased. Royal Bank, TD Bank and Canadian Imperial Bank each reported today third-quarter earnings that beat analysts’ estimates.

Royal Bank, Canada’s largest lender by assets, gained 1.2 percent to C$65.24, the highest in a month. Toronto-Dominion, the second-biggest bank, climbed 2.7 percent to a record C$89.93. Canadian Imperial Bank of Commerce rose 2.8 percent to C$82.66.

The three Toronto-based banks posted record profit in Canadian personal and commercial banking and wealth management even as near record-low interest rates and tight net interest margins proved challenging for lenders.

Phone stocks rallied 2.4 percent on speculation that a Verizon bid for Vodafone Group Plc’s stake in Verizon Wireless will reduce the U.S. carrier’s appetite for Canadian expansion. Vodafone confirmed it’s in talks to sell its stake, in a deal that may be worth $130 billion, according to people familiar with the matter.

Verizon Entry

“If negotiations between Verizon and Vodafone are really heating up, we believe that the prospects of a Verizon entry into Canadian wireless could decline significantly,” Dvai Ghose, head of research at Canaccord Genuity said in a note to clients dated yesterday.

Rogers Communications, Canada’s largest wireless carrier, climbed 3 percent to C$42.01. Telus Corp. rose 2.5 percent to C$33.10.

Health-care companies jumped 1.6 percent, led by a surge in Catamaran Corp. of 1.7 percent to C$58.19.

Shares in producers of raw materials erased earlier losses of as much as 1.3 percent even as metals prices slumped. The S&P/TSX Materials Index advanced 0.5 percent, halting two days of declines.

Dundee Precious Metals surged 10 percent to C$6.80 after saying an internal study of its Kapan mine in Armenia most likely will result in expanding operations there.

Energy stocks were little changed as a group. Shares in commodities producers have been roiled in recent days, amid growing speculation the U.S. and its allies will take military action against Syria.

The prospect of imminent strikes receded today as U.K. Prime Minister David Cameron, the U.S.’s top ally, struggled to win parliamentary backing for military action.

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net

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

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