Canada Stocks Rise as Rally in Gold, Banks Offsets Italy

Canadian stocks rose as advances by gold producers and banks overshadowed concern Italy’s election stalemate will worsen Europe’s debt ceiling crisis.

Bank of Montreal added 1.3 percent after reporting higher profit from its investment banking unit and raising its dividend. Goldcorp Inc. and Eldorado Gold Corp. rose at least 2 percent, as the metal jumped the most in three months. Parkland Fuel Corp. lost 13 percent after an analyst with National Bank Financial lowered his rating for the stock. Entree Gold Inc. slid 10 percent as Mongolia’s mining ministry said it canceled two licenses on land that forms part of the Oyu Tolgoi deposit.

The Standard & Poor’s/TSX Composite Index advanced 9.57 points, or 0.1 percent, to 12,660.44 at 4 p.m. in Toronto. The S&P/TSX has risen 1.8 percent this year. About 822 million shares exchanged hands on Canadian exchanges today, 5.2 percent above the three-month average.

“People are still trying to process the fact that Italy’s vote has gone the way it is,” said Irwin Michael, fund manager with ABC Funds in Toronto. His firm manages about C$800 million ($777.8 million). “Volatility remains and people are skittish.”

Italian party chiefs began jockeying to forge a coalition of rivals and head off a second vote as a political vacuum of at least a month loomed. In the aftermath of an inconclusive election in Italy, Democratic Party leader Pier Luigi Bersani and ex-Premier Silvio Berlusconi may be seeking to avoid a ballot that would favor populist Beppe Grillo, whose movement was the top vote-getter in its first national contest.

Gold Rallies

Recession-scarred voters repudiated budget rigor and made Grillo, a former comedian, a political force. Bersani won the lower house by less than half a point while Berlusconi has a blocking minority in the senate. No formal steps can be taken until a new parliament convenes March 15.

Gold producers contributed most to gains in the S&P/TSX, as five of 10 industry groups advanced. Gold jumped the most since November as Federal Reserve Chairman Ben S. Bernanke defended the U.S. central bank’s asset purchases, boosting demand for bullion as a hedge against stimulus-fueled inflation.

Goldcorp, the world’s second-largest gold producer by market value, rallied 2.4 percent to C$34.44, while Eldorado Gold Corp. added 2 percent to C$10.63.

Bank of Montreal increased 82 Canadian cents to C$63.75 after posting adjusted earnings of C$1.52 a share, ahead of the C$1.48 estimate of 16 analysts surveyed by Bloomberg. The bank, which was the first Canadian lender to report quarterly sales, also raised its quarterly dividend 2.8 percent to 74 Canadian cents a share, from 72 cents previously.

Bank Earnings

Other financial firms advanced, as National Bank of Canada added 0.8 percent to C$77.89 and Bank of Nova Scotia climbed 0.5 percent to C$60.50. Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank and National Bank of Canada report results on Feb. 28.

Energy shares slumped as crude for April delivery lost 0.5 percent to $92.63 a barrel in New York. The metal fell to its lowest settlement since Dec. 31 amid estimates that U.S. crude inventories rose.

Suncor Energy Inc. dropped 1.4 percent to C$30.92 and Canadian Natural Resources Ltd. declined 0.4 percent to C$30.43.

Parkland Tumbles

Parkland Fuel lost C$2.41, the most since August 2011, to C$16.87. The company reported adjusted fourth quarter earnings of 18 Canadian cents a share, short of analysts’ average estimates of 36 cents, according to a Bloomberg survey. Canada’s largest independent fuel distributor had the biggest decline in the benchmark index.

Trevor Johnson, an analyst with National Bank Financial, lowered his rating for the stock to sector perform from outperform while cutting his price target to C$20 from C$21 due to the “light” earnings.

Calfrac Well Services Ltd. slumped 5.2 percent to C$24.85. The provider of drilling services for oil and natural-gas producers posted fourth-quarter earnings of 25 Canadian cents a share, missing the average analyst estimate of 32 cents.

Entree Gold tumbled 5 Canadian cents to 45 cents after Mongolia President Tsakhia Elbegdorj this month requested Rio Tinto Group, its partner in Oyu Tolgoi, transfer all licenses connected to the mine to the venture between the government and Rio. That included Entree Gold, which is 23.6 percent owned by Rio.

Rio controls 64 percent of the Oyu Tolgoi copper and gold deposit, the world’s biggest under construction and set to start production in June. Turquoise Hill Resources Ltd., which is developing Oyu Tolgoi and is a subsidiary of Rio, lost 1.5 percent to C$6.58.

BlackBerry, formerly Research In Motion Ltd., slipped 1.1 percent to C$13.33, paring earlier losses of up to 4.2 percent. The U.S. Defense Department said today it will open its networks by next February to about 100,000 mobile phones and tablet computers made by Apple Inc. and Google Inc. BlackBerry is the Pentagon’s biggest supplier of smart phones.

Before it's here, it's on the Bloomberg Terminal.