Canada Stocks Rise Most Since July on U.S. Debt-Deal Optimism

Oct. 10 (Bloomberg) -- Canadian stocks rose the most in three months as energy companies rallied amid signs that U.S. lawmakers may reach an agreement to increase the debt ceiling and avoid a default.

Canadian Natural Resources Ltd. jumped 4.5 percent as energy stocks surged. BlackBerry Ltd. rose 0.6 percent after company co-founders Michael Lazaridis and Douglas Fregin said they are considering all options including an acquisition of the company. Twin Butte Energy Ltd. jumped 9.1 percent after agreeing to buy Black Shire Energy Inc. for C$358 million ($345 million). Royal Bank of Canada, the nation’s largest lender, climbed 1.9 percent to close at a record.

The Standard & Poor’s/TSX Composite Index rose 164.08 points, or 1.3 percent, to 12,894.41 at 4 p.m. in Toronto, the best rally since July 11. The index is up 3.7 percent this year.

“It’s definitely a risk-on trade, less of a flight to safety, energy is popping higher on that,” said Kevin Headland, a fund manager with Manulife Asset Management Ltd. in Toronto. He helps manage about C$250 billion ($241 billion) with the firm. “It’s a sentiment-driven market. Everybody’s believing there could be some resolution. Better prior to the 17th than on the eve of the 17th.”

House Republican leaders proposed a short-term increase in the debt ceiling, and Jay Carney, the White House press secretary, said that President Barack Obama would likely sign the plan. Both sides are weighing a potential solution to an impasse over raising the debt limit, set to be reached around Oct. 17.

Oil Rally

Energy companies rallied 1.6 percent as a group, as nine of 10 industries in the S&P/TSX advanced. Trading volume was 16 percent higher than the 30-day average.

Canadian Natural Resources gained 4.5 percent to C$33.46 and Suncor Energy Inc. rose 2 percent to C$36.88 as the price of crude rebounded from a three-month low.

BlackBerry, the struggling smartphone maker looking to sell itself, advanced 0.6 percent to C$8.49. Lazaridis, a former co-chief executive, said in a regulatory filing that he and Fregin have hired Goldman Sachs Group Inc. and Centerview Partners LLC to help them study their options, including a possible takeover. Lazaridis also disclosed an 8 percent stake in BlackBerry.

A bid for BlackBerry would compete with a $4.7 billion offer from Fairfax Financial Holdings Ltd., the company’s biggest shareholder, which is seeking partners to help finance a buyout.

Bank Gains

Twin Butte Energy climbed 9.1 percent, the most in almost two years, to C$2.23. The company will pay C$3.45 in cash and stock for each share of Black Shire, and expects the deal to close by Nov. 5.

Royal Bank jumped 1.9 percent to a record C$67.69 to pace gains among Canada’s banks. Bank of Montreal rallied 1.2 percent to C$69.50 and Toronto Dominion Bank rose 1.3 percent to C$92.30.

Brookfield Asset Management Inc. gained 3.1 percent to C$40.03 and Manulife Financial Corp. rose 2.9 percent to C$17.61 as the S&P/TSX Financial Index advanced 1.5 percent to the highest in almost six years.

Pretium Resources increased 4.5 percent to C$5.09. The company plunged 31 percent yesterday after Strathcona Mineral Services Ltd. resigned as an independent evaluator of Pretium’s 10,000 metric-ton ore sample. Strathcona resigned due to a disagreement with another company hired to vet the ore, Pretium Chief Executive Officer Robert Quartermain said in an interview.

Air Canada Soars

Air Canada, the nation’s largest airline, surged 4.3 percent to C$4.89 to extend a five-year high as industrial stocks rallied 1.5 percent as a group.

Air Canada is the best-performing stock in the S&P/TSX this year, soaring 179 percent after cutting costs and reporting better-than-forecast earnings. The airline said on Oct. 3 that costs for the third quarter and 2013 will decline more than anticipated.

Bombardier Inc. rose 1.9 percent to C$4.94. Egypt Air will evaluate Bombardier, along with several other brands as it considers a need for 60 more jet aircraft to replace and expand its existing fleet.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

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