Canadian Stocks Rise After Consolidated Thompson Agrees to Sale
Canadian stocks rose for a second day as European debt concerns eased after a bond auction in Portugal and Consolidated Thompson Iron Mines Ltd. agreed to be bought by Cliffs Natural Resources Inc.
Consolidated Thompson, which produces iron in Quebec, soared 30 percent after accepting the takeover offer of C$17.25 a share in cash. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, gained 2.7 percent after the U.S. Agriculture Department reported a decline in corn inventories. Nexen Inc., an oil and gas producer with operations on five continents, advanced 4.6 percent as crude oil climbed for a third day.
The Standard & Poor’s/TSX Composite Index increased 59.16 points, or 0.4 percent, to a 28-month high of 13,460.21.
“With the successful debt auction this morning by Portugal at yield levels that were a little lower than expected, there’s more optimism they will weather this situation,” said Laura Wallace, who helps manage about C$11 billion ($11.2 billion) at Scotia Asset Management LP, a unit of Bank of Nova Scotia in Toronto. “The Consolidated Thompson bid reaffirms the importance of commodities.”
The index fell 0.3 percent this month through yesterday after surging 15 percent last year. The equity benchmark was led by a 36 percent surge in 2010 in raw-materials companies, the third-largest industry in the Canadian stock market.
Demand from emerging markets such as China, whose economy grew by 10 percent last year, according to the average estimate in a Bloomberg survey of economists, led to gains in base-metal prices.
Consolidated Thompson, which operates the Bloom Lake mine near Cliffs’ iron mine in Wabush, Labrador, agreed to be purchased for about C$4.9 billion. The acquisition would be the largest takeover of a Canadian company since Kinross Gold Corp. bought Red Back Mining Inc. for about $7.1 billion in September, according to Bloomberg data.
Consolidated Thompson surged 30 percent, the most since March 2009, to a record C$17.34. Labrador Iron Mines Holdings Ltd., which is developing ore deposits in eastern Canada, rallied 14 percent to C$13.40. Baffinland Iron Mines Corp., the target of a bidding war between ArcelorMittal and Nunavut Iron Ore Acquisition Inc., advanced 4.1 percent to C$1.51.
Other producers of industrial metals rallied as all of the major base metals traded on the London Metal Exchange climbed.
Teck, First Quantum
Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 1.8 percent to C$64.24, extending a record. First Quantum Minerals Ltd., the country’s second-biggest publicly traded copper producer, rose 1.3 percent to C$121.16. Lundin Mining Corp., which mines base metals in Europe, soared 7.1 percent to C$7.90.
Grande Cache Coal Corp., which produces coal in Alberta, gained 6.3 percent to a five-year high of C$11.90. In a note to clients released after markets closed yesterday, Mike Plaster, an analyst at Salman Partners Inc., raised his 12-month price forecast on the shares to C$13 from C$10.30, citing the likelihood of higher coal prices.
Crude oil extended its weekly gain to 4.3 percent as bond yields fell in European countries including Portugal, Ireland and Greece. European governments are considering a new package, including a loan to Portugal of about 60 billion euros ($78 billion) to counter the continent’s debt crisis, according to two people with direct knowledge of the matter.
Portugal sold 599 million euros of bonds due in 2020 at a yield of 6.716 percent, compared with 6.806 percent at the previous auction on Nov. 10.
Yesterday, the operator of the Trans-Alaska Pipeline said it will take at least five days to install a bypass around a leak in the pipeline that carries 15 percent of U.S. crude output.
Suncor Energy Inc., Canada’s largest oil and gas producer, advanced 0.7 percent to C$37.68. Nexen jumped 4.6 percent to C$24.07. EnCana Corp., the country’s biggest natural gas producer, increased 1.8 percent to C$29.22 as the fuel rose.
Crew Energy Inc., which produces oil and gas in western Canada, advanced 5.4 percent to C$20.70. Adam Gill, an analyst at Canadian Imperial Bank of Commerce, boosted his rating on the stock to “sector outperform” from “sector perform” in a note dated yesterday.
Potash Corp. and Agrium Inc. climbed after the USDA said corn inventories dropped 7.9 percent on Dec. 1 from a year earlier. Corn and soybean futures rose to the highest since July 2008.
Potash Corp. increased 2.7 percent to C$167.29. Agrium, Canada’s second-biggest fertilizer producer, gained 2.9 percent to C$92.54, the highest since July 2008.
Yoga-wear retailer Lululemon Athletica Inc. surged 8.2 percent to C$71.94 after raising its fourth-quarter earnings forecast to 55 cents a share to 57 cents a share, excluding certain items. Analysts had forecast profit of 50 cents a share, according to the average estimate in a Bloomberg survey.
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