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Canadian Stocks Extend Longest Rally in 10 Years as Gold Rises

Feb. 14 (Bloomberg) -- Canadian stocks rose a ninth day, the longest streak in a decade, as gains in gold companies offset weaker-than-forecast data on U.S. and Canadian manufacturing.

OceanaGold Corp. and Detour Gold Corp. rallied at least 4 percent as gold mining companies led gains in the Standard & Poor’s/TSX Composite Index. Just Energy Group Inc. jumped 11 percent after reporting third-quarter earnings ahead of estimates as it added customers. Silvercorp Metals Inc. plunged 13 percent after reducing its dividend.

The S&P/TSX rose 53.11 points, or 0.4 percent, to 14,054.76 at 4 p.m. in Toronto. The benchmark equity gauge has jumped 4.2 percent in nine days for the longest rally since November 2003 and closed at its highest level since April 2011. Canadian markets will be closed on Feb. 17 for the Family Day holiday in Toronto.

“It’s gold, gold, gold,” said Philip Petursson, director of institutional equities at Manulife Asset Management Ltd. in Toronto. The firm manages about C$265 billion ($241 billion). “Gold has been the dominant driver of performance on the TSX and it’s kind of surprised me it’s done as well as it has. Lump in the other precious metals in there too, and it’s been reflected in the producers the past few weeks.”

Canadian factory sales unexpectedly declined 0.9 percent to C$49.9 billion in December, led by slumping sales in aerospace products and motor vehicles. The median estimate of 17 economists was for little change to the measure, according to data compiled by Bloomberg.

Federal Reserve figures showed U.S. factory production slumped 0.8 percent in January, the most since May 2009, amid severe winter weather conditions. Median estimates had called for a 0.1 percent advance.

Gold Rally

Detour Gold climbed 5.7 percent to C$9.89, the highest since September, and OceanaGold jumped 4 percent to C$2.59 as raw-materials stocks rallied 1.3 percent as a group, the most in the S&P/TSX. Eight of 10 industries in the benchmark Canadian equity gauge advanced on trading volume 1.7 percent higher than the 30-day average.

Detour Gold has been the best-performing stock in the S&P/TSX in 2014 with a 141 percent gain, after being the worst performer a year ago.

All but two of 23 members of the S&P/TSX Gold Index advanced as the industry measure rallied 2 percent for the highest close since August. Gold climbed 1.4 percent to $1,318.60 an ounce in New York and rallied 4.4 percent in five days, the biggest weekly advance since August.

First Majestic Silver Corp. increased 4.5 percent to C$13.38 and Silver Standard Resources Inc. gained 4.5 percent to C$11.35 as silver futures rallied 5 percent in New York. Silver prices have risen for 10 days, the longest rally since 2008, and are up 11 percent this year.

Dividend Cut

Silvercorp Metals plunged 13 percent to C$3.16, the biggest drop since September 2011, after cutting its quarterly dividend to 0.5 Canadian cents a share from 2.5 cents as net income plunged 58 percent in the third quarter.

Just Energy Group, which sells electricity and natural gas to residences in Canada and the U.S., soared 11 percent to C$8.30. The company’s subscriber base rose to 4.6 million in the third quarter, a 7 percent increase from year-ago numbers.

Air Canada, the nation’s largest airline, dropped 3.4 percent to C$5.74 for a third day of losses since forecasting a drop in first-quarter profit on Feb. 12. The stock closed at the lowest level since November.

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

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