Canada Stocks Rise as Gold Producers Reach 4-Month High

Canadian stocks rose, following the biggest drop since June yesterday, as gold producers advanced to a four-month high to overshadow data showing a decline in the nation’s wholesale sales.

Semafo Inc. soared 13 percent to pace gains among gold producers. Kinross Gold Corp. and B2Gold Corp. rose at least 3.9 percent. Silver Wheaton Corp. climbed 3.2 percent as silver trimmed earlier losses. Bombardier Inc. fell 1.5 percent, dropping for a second day. Paladin Energy Ltd. slumped 5.1 percent after analysts lowered their ratings for the stock.

The Standard & Poor’s/TSX Composite Index rose 82.09 points, or 0.7 percent, to 12,670.11 at 4 p.m. in Toronto. The index has gained 1.9 percent this year. Trading volume was 5.1 percent lower than the 30-day average.

“The gold sector is stronger and energy names are mixed, although crude at $105 a barrel isn’t what I’d call disastrous either,” said John O’Connell, chief executive officer with Davis Rea Ltd. in Toronto. The firm manages about C$600 million ($577 million). “You’re seeing some flow back into gold because it’s one of those areas that has been beaten up a lot.”

Gold gained for the fourth time in five sessions, rising 0.5 percent to $1,372.60 an ounce in New York. Gold stocks in Canada have slumped 28 percent this year as the price of the metal heads for the worst annual drop since 1997.

Precious Metals

Semafo jumped 13 percent to C$2.49, the most since May 2012, Kinross Gold rallied 3.9 percent to C$6.14 and B2Gold jumped 6.1 percent to C$3.13 as 23 of 24 members of the S&P/TSX Gold Index increased. The index climbed 3.5 percent to the highest close since April 11.

Silver Wheaton advanced 3.2 percent to C$28.36 and Silvercorp Metals Inc. rose 4 percent to C$3.90 as the price of silver fell 0.4 percent after paring earlier losses of as much as 3.9 percent.

Canadian wholesale sales fell in June from a record the previous month with declines in every major category, adding to signs of a mid-year slowdown in the world’s 11th largest economy.

“Growth is forecast to recover over the second half of the year in tandem with a stronger outlook for the United States,” said David Tulk, Chief Canada macro strategist with TD Securities Inc. in Toronto, in a note after the report. “Allowing net exports to take over the mantle of growth will take some of the pressure off of the fatigued domestic economy and provide comfort to the Bank of Canada that, even if sluggish by historical standards, the recovery remains on track.”

The Canadian economy is forecast to slow to 1.6 percent in the second quarter from 2.5 percent in the first before accelerating to 2.1 percent growth in each of the next two quarters, according to economists’ estimates.

Bank Stocks

Royal Bank of Canada, the nation’s largest lender, added 1 percent to C$64.67, for the highest close in three weeks. The S&P/TSX Financials Index climbed 0.7 percent.

Bombardier, based in Montreal, lost 1.5 percent to C$4.72. The stock has lost 3.3 percent in the past two days, after National Bank analyst Cameron Doerksen said in a note yesterday the company’s CSeries jet may have its entry into service delayed to early 2015 from September 2014. The CSeries jet has yet to take its maiden flight.

Paladin Energy, which explores for uranium in Australia and Southern Africa, sank 5.1 percent to 56 Canadian cents, a record low according to data compiled by Bloomberg, after Matthew Keane, analyst with Argonaut Securities Pty Ltd. and Glyn Lawcock, analyst with UBS AG, both lowered their ratings for the stock to hold.