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Canada Stocks Extend Longest Rally Since ’95 as Loblaw Climbs

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Feb. 20 (Bloomberg) -- Canadian stocks rose a 12th day, extending the longest advance in almost two decades, after Quebecor Inc. bought airwaves to expand its wireless services and Loblaw Cos. reported better-than-estimated earnings.

Quebecor surged 8 percent after spending C$233 million ($210 million) yesterday to buy spectrum in four provinces. Loblaw climbed 4.8 percent. TransAlta Corp. sank 7.2 percent as it cut its dividend and agreed to sell its stake in a U.S. electricity generation company to raise cash. Tim Hortons Inc. and CCL Industries Inc. rose at least 1.8 percent after the companies boosted their dividends.

The Standard & Poor’s/TSX Composite Index rose 90.64 points, or 0.6 percent, to 14,210.37 at 4 p.m. in Toronto. The benchmark equity gauge has jumped 5.4 percent in 12 days for the longest rally since March 1995. The index is trading at its highest level since 2011.

“I like this market, not just because it keeps on going up, but that there’s some logic to it,” said David Cockfield, fund manager at Northland Wealth Management in Toronto. He helps manage about C$270 million with the firm. “It seems to be a much more rational market, where things go up for a rational reason like better earnings.”

The S&P/TSX is 0.4 percent below its peak of 14,270.53 reached on April 5, 2011, the highest level since June 2008. Of the 241 stocks in the benchmark Canadian equity gauge, 159 have advanced this year. The S&P/TSX trades at 19.6 times earnings, its highest valuation since April 2011, according to data compiled by Bloomberg.

Loblaw Earnings

Eight of 10 industries in the S&P/TSX rose and trading volume was 10 percent above the 30-day average.

Large-cap fund managers posted their best return relative to the S&P/TSX in 12 years in 2013, with 94 percent of managers besting the benchmark equity gauge’s 13 percent gain, according to a report from Russell Investments. The median return for the year was 19 percent, after fund managers avoided the slump in gold stocks by being about 3.5 percent underweight in the industry last year, the report said.

Loblaw climbed 4.8 percent to C$44.29, the biggest gain since July, to pace gains as consumer staples stocks rallied 2 percent as a group. The company posted adjusted fourth-quarter earnings of 65 Canadian cents a share, ahead of analysts’ projections of 55 cents. Same-store sales rose 0.6 percent, boosted by timing of the Canadian Thanksgiving holiday, the company said in a statement.

Wireless Spectrum

Quebecor rallied 8 percent to C$25.50, for the biggest gain since November 2009. The company is positioned to become Canada’s fourth national wireless operator after purchasing seven licenses in the 700-megahertz spectrum, useful for penetrating dense urban areas.

The Canadian government netted C$5.27 billion from the auction, including C$3.29 billion from Rogers Communications for 22 licenses. Rogers, BCE Inc. and Telus Corp. account for about 90 percent of wireless customers in Canada.

BlackBerry Ltd. advanced 4.5 percent to C$10.41 after Facebook Inc. agreed to buy mobile-messaging company WhatsApp Inc. for as much as $19 billion, highlighting the potential value of BlackBerry’s messenger service.

Tim Hortons added 1.8 percent to C$58.98, the biggest advance since December. The company raised its quarterly dividend 23 percent to 32 Canadian cents a share.

The quick-serve coffee retailer posted an 11 percent jump in sales in the fourth quarter, due to an increase in franchise fees from higher levels of renovations and restaurant development, the company said.

CCL Industries, which produces packaging and labels for consumer products, jumped 6.3 percent to a record C$87.17 after boosting its quarterly dividend to 25 Canadian cents a share.

TransAlta, an Alberta electricity producer, slumped 7.2 percent to C$13.76, the biggest decline in five years. The company trimmed its dividend 38 percent to 72 Canadian cents a share and sold its 50 percent stake in CE Generation, Blackrock development and Wailuku to MidAmerican Renewables, its partner in the holdings, for $193.5 million.

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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