Canada Stocks Climb, Led by Centerra, Barrick as Gold Increases
Canadian stocks rose for a sixth day, the longest stretch since November, as gold producers advanced as the price of the metal increased amid concerns about U.S. debt ceiling discussions.
Centerra Gold Inc. (CG) climbed 6.6 percent after its gold production forecast was almost double from last year. Barrick Gold Corp. (ABX) and Goldcorp Inc. added at least 1 percent as gold rose for a second day. Manulife Financial Corp. (MFC) lost 1.4 percent after Bank of Montreal analysts lowered their rating on the stock. Lululemon Athletica Inc. (LLL), the Canadian yoga-wear retailer, sank 4.1 percent on the Toronto Stock Exchange after forecasting fourth-quarter sales that trailed analysts’ estimates.
The Standard & Poor’s/TSX Composite Index (SPTSX) rose 38.88 points, or 0.3 percent, to 12,641.97 at 4 p.m. in Toronto. The benchmark gauge has gained 1.7 percent this year. Trading volume was 6.5 percent higher than the 30-day average at this time of the day.
“The one thing that’s holding up the TSX Index today is material stocks, in particular the gold sector,” Youssef Zohny, a portfolio manager with Stenner Investment Partners of Richardson GMP Ltd., said on the phone from Vancouver. Richardson GMP manages about C$16 billion ($16.3 billion). “We’re seeing Republicans and Democrats start to dig in with their upcoming debt ceiling fights in February and March and that’s helping gold prices today.”
U.S. Treasury Secretary Timothy F. Geithner warned yesterday of severe economic hardship should Congress fail to raise the debt ceiling that lawmakers have increased or revised 79 times since 1960, including 49 times under Republican presidents. President Barack Obama vowed he won’t negotiate over raising the government’s debt ceiling.
Centerra Gold Inc. rallied 6.6 percent to C$10. The company said 2013 gold production will be between 605,000 and 660,000 ounces, almost double its 2012 gold production of 387,076 ounces.
Barrick, the world’s largest producer of gold, gained 1.1 percent to C$34.03 and Goldcorp, the second-largest, rose 1.1 percent to C$36.83.
Gold for February delivery advanced 0.9 percent to $1,683.90 an ounce in New York. U.S. Federal Reserve Chairman Ben S. Bernanke said yesterday that while the economy is responding to monetary stimulus “there is still quite a ways to go.”
Manulife, Canada’s largest insurer, fell 1.4 percent to C$14.12. Tom Mackinnon, analyst with BMO Capital Markets, cut his rating for Manulife to market perform from outperform due to valuation after a 20 percent rally in the past two months.
The shares trade at 25.1 times reported earnings, more than twice the multiple for a group of financials in the S&P/TSX, according to data compiled by Bloomberg.
Lululemon slumped 4.1 percent to C$68.24 on the Toronto Stock Exchange. The company, which has posted double-digit gains in same-store sales for 13 straight quarters, yesterday said it expects a high single-digit increase.
Revenue for the quarter will be at the “high end” of its original forecast of $475 million to $480 million, the company said. Analysts projected $489 million, according to the average of 22 estimates compiled by Bloomberg.
Celestica Inc. (CLS), an electronic components manufacturer, dropped 1.6 percent to C$8.17. Gus Papageorgiou, an analyst with Bank of Nova Scotia, cut his recommendation on the stock to sector perform from sector outperform, citing its valuation relative to peers. The stock is up 23 percent since touching a three-year low in October.
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