Canadian Stocks Gain, Rebounding From Seven-Month Low

Canadian stocks rose the most since April, after China’s central bank said it will ensure stable money markets and better-than-forecast U.S. data bolstered optimism about the world’s largest economy.

BlackBerry rose 3.2 percent after a Morgan Stanley analyst raised his rating on the stock. CML Healthcare Inc. surged 47 percent after LifeLabs Medical Laboratory Service agreed to buy the diagnostic services provider for about C$1.22 billion ($1.2 billion). Enbridge Inc. gained 3.2 percent after restarting part of its oil-sands pipeline system in Alberta.

The Standard & Poor’s/TSX Composite Index climbed 168.56 points, or 1.4 percent, to 12,005.42 at 4 p.m. in Toronto, the biggest gain since April 24. Trading was 19 percent higher than the 30-day average.

“It’s like a tug of war between the bullish and the bearish factors out there,” Irwin Michael, portfolio manager with ABC Funds, said from Toronto. The firm manages about C$800 million. “People are worrying a lot about China. The economic data indicating that the U.S. economy is getting better is not linear.”

The benchmark gauge for Canadian equities dropped 1.3 percent yesterday to the lowest level since November as commodities producers slumped amid concern China’s cash crunch would hurt growth in the world’s biggest consumer of materials and energy.

China’s central bank said today it has provided liquidity to some financial institutions to stabilize money-market rates and will use short-term liquidity operations and standing lending-facility tools to ensure steady markets. China is Canada’s second-biggest trading partner behind the U.S.

U.S. Data

U.S. economic data today showed orders for durable goods rose more than forecast in May and sales of new homes climbed more than estimated to the highest level in almost five years. A separate report showed confidence among U.S. consumers rose in June to the highest in more than five years.

The S&P/TSX has fallen 5.1 percent this month to erase a gain for the year and is on track for the first quarterly loss since the same period last year.

All ten industries in the index advanced, with technology health-care and industrial stocks adding more than 2.3 percent.

CML Healthcare surged 47 percent to C$10.60, the highest in 13 months. Closely held LifeLabs agreed to buy the company in an acquisition that combines two of Canada’s largest medical diagnostic laboratory operators. CML’s gain helped health-care stocks rise 2.3 percent as a group.

BlackBerry Rating

BlackBerry, formerly known as Research in Motion Ltd., rose 3.2 percent to C$15.32, the highest since May 14. Morgan Stanley analyst Ehud Gelblum said he expects sales of the company’s new BB10 smartphone to meet or beat his firm’s first-quarter estimates, citing strong global sales.

Enbridge rose 3.2 percent to C$43.99 after the largest transporter of Canadian crude to the U.S. restored operations on a segment of an Alberta pipeline network and said it will restart other lines over the next “several days,” according to a statement yesterday.

The Calgary-based company shut the Athabasca and Waupisoo systems, which have total capacity to move as much as 1.17 million barrels a day, after finding a 750-barrel spill caused by severe flooding.

Industrial stocks contributed the most to the benchmark index’s gain, rising 2.3 percent as a group. Canadian Pacific Railway Ltd. jumped 3.5 percent to C$126.51 after saying it re-opened its line west of Calgary and planned to open segments of its main line through downtown after floods interrupted service.

Tim Hortons

Tim Hortons Inc. gained 3.2 percent to C$56.29. Scout Capital Management LLC demanded in an open letter that the company increase debt for share repurchases and curtail the use of cash flow to fund a U.S. expansion. The New York-based investment firm has a 5.5 percent stake in the Canadian coffee and doughnut chain.

Royal Bank of Canada, the country’s biggest bank, is leading a group of investors and brokers creating a new Canadian stock exchange to compete with TMX Group Ltd.’s Toronto Stock Exchange.

The bourse, to be run by a venture called Aequitas Innovations Inc., is also backed by Barclays Plc, CI Financial Corp., IGM Financial Inc., ITG Canada Corp. and PSP Public Markets Inc., according to a statement today. The group will file an application to regulators by the end of the year.

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