Canadian stocks erased gains in the final hour of trading, paring the longest monthly winning streak in three years, as drop among miners offset gains in industrial and energy shares amid an unexpected acceleration in growth.
Mega Brands Inc., the world’s second-largest maker of snap-together blocks after Lego A/S, surged 36 percent after Mattel Inc. agreed to buy the toymaker. Atlantic Power Corp., which runs electricity generation stations, jumped 3.9 percent after posting the first per-share profit in three quarters. OceanaGold Corp. slumped 3.3 percent as gold fell for the second time in three days. Valeant Pharmaceuticals International Inc. dropped the most since June.
The Standard & Poor’s/TSX Composite Index fell 5.15 points, or less than 0.1 percent to 14,209.59 at 4 p.m. in Toronto, erasing an earlier gain of as much as 0.5 percent. The benchmark equity gauge advanced 3.8 percent in February, an eighth straight monthly gain. The index earlier surpassed its highest closing level since 2008.
“We’ve seen some choppiness on both sides so far this year, some volatility,” said Youssef Zohny, portfolio manager at Stenner Investment Partners of Richardson GMP Ltd. from Vancouver. Richardson GMP manages C$26 billion ($23 billion). “It’s possible there was some portfolio rebalancing and some profit-taking today at the end of a very good month.”
Canada’s economy grew 2.9 percent in the fourth quarter compared with 2.7 percent in the prior three months as consumer spending increased and companies added to inventories. Economists had projected growth to slow to 2.6 percent.
Bank of Canada Governor Stephen Poloz has said there is “significant slack” in the economy and that it will take about two years to reach full output. Economists predict he will keep his benchmark interest rate at 1 percent at a March 5 policy announcement.
“You have an economy that’s growing but not growing so fast that the central bank has to take away the punchbowl. Growth of 2.5 percent to 3 percent isn’t bad, and there are no worries about rising interest rates,” said Michael O’Brien, fund manager at TD Asset Management Inc. in Toronto. He helps manage C$218.3 billion with the firm.
Information technology stocks tumbled 1.2 percent as a group as four of 10 industries declined on trading volume 4 percent below the 30-day average.
BlackBerry Ltd. dropped 5.4 percent to C$11.05, the biggest decline in the S&P/TSX. A company spokesman said BlackBerry has no current plans to release a new tablet, in response to a report from the website Pocket-Lint.
Valeant fell 4.2 percent to C$6.90, paring its advance this year to 27 percent.
OceanaGold lost 3.3 percent to C$2.65 and Agnico Eagle Mines slipped 3 percent to C$35.53 as gold futures dropped 0.8 percent to $1,321.60 an ounce in New York. The metal price has rallied 9.9 percent this year, rebounding from the worst loss since 1981 last year.
Mega Brands soared 36 percent to C$17.72, the biggest gain since December 2009, after Mattel agreed to buy the company for $460 million. The board of Montreal-based Mega Brands unanimously approved the deal and investors holding 39 percent of the stock, including Chief Executive Officer Marc Bertrand and Fairfax Financial Holdings Ltd., have agreed to the sale.
Surge Energy Inc. rallied 3.5 percent to C$5.90 after buying a 20 percent block of shares in Longview Oil Corp. for C$41.4 million. Surge would like to pursue a “mutually beneficial business combination” with Longview, the company said in a statement. Longview advanced 4.7 percent to C$5.38.
Atlantic Power rose 3.9 percent to C$2.90 after posting adjusted earnings of 4 cents a share, following losses of 32 cents and 2 cents in the two previous quarters.
The company decided to defer a decision on whether to reduce its dividend, which may cause shares to temporarily rise, Nelson Ng, analyst with RBC Capital Markets, said in a note to clients. Ng said a cut is “much needed.”