Canadian Stocks Rise as Valeant, Commodities Producers Rally

  • Valeant rebounds from record 49% monthly loss in October
  • U.S., Europe factory data optimism overshadows China weakness

Canadian stocks rose, after posting the best gain in six months in October, as Valeant Pharmaceuticals International Inc. rebounded from its worst-ever monthly loss amid intense scrutiny over its business practices.

Valeant rallied 9.1 percent, the most in a month, after stock commentary site Citron Research said it won’t release new allegations against the drugmaker. Penn West Petroleum Ltd. and Potash Corp of Saskatchewan Inc. rallied to lead commodities producers higher as factory data in Germany, Italy and the U.S. topped estimates, overshadowing a third straight monthly contraction in Chinese manufacturing data.

The Standard & Poor’s/TSX Composite Index rose 93.84 points, or 0.7 percent, to 13,623.01 at 4 p.m. in Toronto. The Canadian benchmark equity gauge climbed 1.7 percent in October, the best since April. It was nevertheless the worst performance among 24 developed-nation markets in that time, as a gauge of global equities capped its best month in four years.

Equities rose around the world again on Monday, with the MSCI All-Country World Index adding 0.5 percent. Manufacturing in the euro area unexpectedly accelerated in October, to 52.3 from 52.0 in September. American manufacturing was little-changed at 50.1, just ahead of the median forecast of 50 in a Bloomberg survey of economists.

China’s official purchasing managers index remained at 49.8 in October, compared with an estimate of 50, the line between expansion and contraction. China is Canada’s largest trading partner after the U.S. and one of the world’s most important resource consumers.

Canadian energy and raw-materials stocks climbed at least 1.1 percent despite a decline in commodities prices. The two industries, still among the worst-performing in the S&P/TSX for the year, rallied at least 7 percent in October to lead the index.

Gold producers climbed 7.8 percent last month, the most since January, as weakening global growth, including in Europe and China, dimmed speculation of a rate increase. The probability that U.S. policy makers will increase borrowing costs has since risen to 50 percent according to futures data after officials signaled last week a December increase remains on the table.

Valeant rebounded from a record 49 percent plunge in October. On Oct. 21, Citron accused Valeant of an Enron-like strategy of recording fake sales using an affiliated pharmacy, Philidor Rx Services, to store inventory and record those transactions as sales. Valeant shares plummeted 28 percent in one day. The company has denied the allegation.

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