Canadian Stocks Rise as ECB Offers Loans to Tame Credit Crisis
Canadian stocks rose for a third day, led by financial and energy companies, on optimism that Europe is working to tame its debt crisis.
Royal Bank of Canada (RY), Canada’s largest lender by assets, gained 3.2 percent after the European Central Bank coordinated with international policy makers to lend dollars to banks. Canadian Natural Resources Ltd. (CNQ), Canada’s second-biggest energy company by market value, advanced 2.2 percent as crude futures climbed. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, fell 1.1 percent as the metal dropped to a September low.
The Standard & Poor’s/TSX Composite Index increased 131.46 points, or 1.1 percent, to 12,424.84. The index has gained 2.3 percent over three days.
“When you’re seeing the coordinated effort from the central banks to lend dollars to the euro-area banks, I think that’s giving investors a little bit more confidence,” said Allison Mendes, a money manager at Manulife Asset Management in Toronto. The unit of Manulife Financial Corp. (MFC) oversees about $217 billion. “This is definitely welcome news for investors.”
The S&P/TSX is set to decline for a seventh straight month, the longest streak since 1984, as energy and financial stocks have retreated on concern the global economic recovery is in jeopardy. The Canadian stock benchmark has plunged 12 percent, and the MSCI World Index 13 percent, since Feb. 28 as bond yields in the most-heavily indebted European countries have surged on concern Greece may default.
The ECB said it will lend dollars to euro-area banks to ensure they have enough of the U.S. currency through the end of the year. The euro rallied the most since Aug. 15 against the dollar.
Greek 10-year government bond yields fell the most since July 22 after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they’re “convinced” Greece will stay in the euro area. European policy makers are to meet in Wroclaw, Poland, tomorrow to discuss how they will implement the expansion of the euro region’s new bailout fund.
Stocks extended their gains after the U.S. Federal Reserve said industrial production in the country increased 0.2 percent last month. Economists had forecast no change, according to the median estimate in a Bloomberg survey.
All S&P/TSX banks and the three largest insurers climbed. Royal Bank increased 3.2 percent to C$47.47. Toronto-Dominion Bank (TD), its biggest domestic rival, rose 2.5 percent to C$75.17.
Geared to Rates
Manulife, North America’s fourth-largest insurer, rallied 6.3 percent, the most since November, to C$12.91. “Manulife is a stock very geared to long-term interest rates,” Peter Routledge, an analyst at National Bank of Canada, said in a telephone interview from Toronto. “If the market believes long- term interest rates are headed back up, Manulife’s stock should benefit.”
Energy stocks gained as crude futures advanced 0.6 percent. Canadian Natural increased 2.2 percent to C$35.22. Cenovus Energy Inc. (CVE), the country’s fifth-largest energy company, climbed 3.3 percent to C$34.10. Vermilion Energy, Inc., an oil and gas producer with operations in Australia, Europe and Canada, jumped 5.4 percent to C$44.71.
S&P/TSX gold stocks fell for a fifth day as the metal dropped 2.5 percent in New York. Goldcorp declined 1.1 percent to C$49.83. Eldorado Gold Corp. (ELD), which mines in China and Turkey, decreased 2.8 percent to C$19.78. China Gold International Resources Corp Ltd. (CGG) lost 5.1 percent to C$3.74, extending its weekly plunge to 24 percent.
Silvercorp Metals Inc. (SVM), which operates in China, climbed 6.8 percent to C$6.90 after saying it bought C$31.2 million ($31.6 million) of its own shares. The stock plunged to the lowest since February 2010 this week after Muddy Waters LLC, the research firm that published assertions of financial manipulation at Sino-Forest Corp., said it had sold Silvercorp short. The Ontario Securities Commission said Aug. 26 that Sino- Forest “appears to have misrepresented some of its revenue.”
Base-metal and coal producers gained as copper futures rebounded from a 2011 low. First Quantum Minerals Ltd. (FM), Canada’s second-largest publicly traded copper producer, advanced 4.5 percent to C$21.13. Teck Resources Ltd. (TCK/B), Canada’s biggest company in the industry, increased 2.2 percent to C$40.01.
Propane distributor Superior Plus Corp. (SPB) sank 7.4 percent to a record-low C$8.30. The shares have tumbled 12 percent since DBRS Ltd. cut its credit ratings on the company Sept. 12.
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