Canadian Stocks Rise With Phone Shares as Yellen Picked for Fed

Canadian stocks rose from a five-week low as telephone companies jumped the most in a two weeks amid speculation that Janet Yellen won’t rush to withdraw stimulus when she takes over as Federal Reserve chairman.

BCE Inc. and Telus Corp. gained at least 1.4 percent as phone stocks gained for a fourth day. Wi-Lan Inc. added 1 percent after settling litigation with BlackBerry Ltd. Pretium Resources Inc. sank 31 percent as a company overseeing its gold project in northern British Columbia resigned. Jean Coutu Group PJC Inc. tumbled 4.2 percent after posting worse-than-estimated results.

The Standard & Poor’s/TSX Composite Index rose 37.92 points, or 0.3 percent, to 12,730.33 at 4 p.m. in Toronto, after earlier falling 0.1 percent. The index is up 2.4 percent this year.

“What we’re seeing today and all week is quite a bit of volatility and sensitivity to news headlines in the U.S.,” said Youssef Zohny, portfolio manager with Stenner Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$16 billion ($15.4 billion). “There’s a little more certainty on the direction of monetary policy now that we know who’s going to be in charge and more details from the minutes. The market is responding well to that.”

Janet Yellen, the current Fed vice chairman, was nominated by U.S. President Barack Obama to succeed Ben S. Bernanke as chairman of the Federal Reserve. Yellen is expected to advocate for maintaining stimulus that has helped fuel a global rally in equities.

Bond Purchases

Most Fed policy makers said the central bank was likely to reduce the pace of its bond purchases this year, according to minutes released today of their last meeting, which took place before the government shutdown.

The S&P/TSX retreated 0.8 percent yesterday to the lowest since Aug. 30 as concern grew that U.S. lawmakers may fail to raise the federal debt ceiling in time to avoid a government default, expected on Oct. 17.

Economists say failure by the world’s largest borrower to pay its debt will devastate stock markets from Brazil to Zurich and throw the U.S. and world economies into a recession.

Some possible paths out of the partisan impasse in Washington are starting to emerge. Each option is tentative and lawmakers remain far from an agreement amid verbal sparring between President Barack Obama and House Speaker John Boehner.

“The longer this thing goes on and the lower the market goes, the more bargains there will be,” said John Kinsey, fund manager with Caldwell Securities Ltd. in Toronto. He helps manage about C$1 billion ($962 million).

Canadian Industries

Eight of 10 industries in the S&P/TSX advanced, with telephone stocks adding 1.5 percent for a fourth day of gains. Trading volume was 9.3 percent lower than the 30-day average.

BCE added 2.2 percent, the most in a month, to C$44.70. Telus increased 1.4 percent to C$34.39 and Rogers Communications Inc. rose 0.9 percent to C$45.18.

The Canadian government on Oct. 7 rejected Manitoba Telecom Services Inc.’s proposed C$520 million sale of its Allstream business division to Accelero Capital Holdings Sarl Group, an investment firm co-founded by Egyptian billionaire Naguib Sawiris, due to national security concerns.

The decision raises questions about Canadian ownership policy in the wireless industry. Prime Minister Stephen Harper’s government has been trying to encourage competition in the nation’s wireless sector, while stepping up scrutiny of foreign investments.

BlackBerry Patents

Wi-Lan added 1 percent to C$3.90 after settling litigation with BlackBerry. The smartphone maker obtains licenses for some patents. Terms of the agreement were not disclosed.

Allana Potash Corp. jumped 11 percent to 47 Canadian cents after the fertilizer producer said it has been granted a mining license for the Danakhil potash project in Ethiopia.

Pretium Resources plunged 31 percent to C$4.87, the lowest since its initial offering in 2010. Strathcona Mineral Services Ltd., hired for an independent assessment of a 10,000-metric-ton ore sample, resigned, Pretium said today in a statement.

Jean Coutu, the drugstore chain operator, lost 4.2 percent to C$18.12, the biggest decline since July 2012. The company reported second-quarter adjusted earnings per share that fell short by 1 Canadian cent of analysts surveyed by Bloomberg. Comparable pharmacy sales dropped 0.5 percent in the quarter.

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