Canadian Stocks Erase Losses as Gold Miner Slump Offsets DealsEric Lam
Canadian stocks erased losses in the final two hours of trading as declines among gold producers offset rallies in Paladin Labs Inc. and Open Text Corp., fueled by deal activity.
Iamgold Corp. dropped 3.9 percent as the metal’s price dropped to a two-week low. Paladin, a Canadian drug company, surged 49 percent to a record high after agreeing to be bought by Endo Health Solutions Inc. Open Text jumped 10 percent after agreeing to acquire a technology consulting firm. Encana Corp. rose 3 percent as it plans to cut its workforce, lower its dividend and sell shares in an initial offering for one of its assets to boost cash flow.
The Standard & Poor’s/TSX Composite Index was unchanged at 13,361.78, at 4 p.m. in Toronto, erasing earlier losses of as much as 0.4 percent.
“I think people are still searching for direction. We’re not going to get much on the calendar until Thursday,” said Brian Huen, managing partner with Red Sky Capital Management Ltd., on the phone from Toronto. His firm manages about C$225 million ($215.4 million). “Gold stocks had a pretty good relief rally yesterday, but there’s very little momentum in gold prices right now so with the volatility in the sector it’s not surprising to see it at a loss.”
The S&P/TSX rallied 4.5 percent in October and is trading near a two-year high. The benchmark Canadian equity gauge has advanced 7.5 percent this year, the third-worst performer in the world among developed markets, ahead of Hong Kong and Singapore.
Investors have been assessing global data to determine whether major economies are strong enough to generate faster growth. Data today from the U.S. showed service industries expanded in October at a faster pace than forecast. Reports later this week may show the U.S. economy slowed in the third quarter and employers hired fewer workers in October. Canada will report jobs data for last month on Nov. 7.
The European Union today cut its forecast for euro-area growth next year and raised its unemployment estimate. Investors are weighing whether the region’s central bank will cut interest rates on Nov. 7.
Five of 10 groups in the S&P/TSX slumped today. Raw-materials producers paced losses, sliding 0.5 percent. Trading volume was 12 percent higher compared with the 30-day average.
The S&P/TSX Gold Index slid 1.2 percent after advancing 3 percent yesterday. The gauge is down 40 percent this year. The price of gold slumped to the lowest in more than two weeks as the U.S. services data fueled bets the Federal Reserve may trim stimulus sooner than anticipated.
Alacer Gold Corp. fell 6.9 percent to C$2.68 and Iamgold dropped 3.9 percent to C$5.18.
Bombardier Inc., the world’s third-largest planemaker, lost 0.2 percent to C$4.53 for a fifth day of declines. The stock has slumped 14 percent since posting weaker-than-estimated quarterly profit on Oct. 31.
Canadian Western Bank lost 1.8 percent to C$32.94 and Royal Bank of Canada, the nation’s largest lender, slipped 0.4 percent to C$70.04. Seven of 10 members of the the S&P/TSX Banks Index retreated today.
Open Text gained 10 percent to C$85.32, an all-time high, after agreeing to buy closely held GXS Group Inc. in a $1.17 billion deal.
GXS is a business-to-business cloud integration company, marketing software that helps companies communicate and share data.
Paladin climbed 49 percent to a record C$95.43, after the drug company agreed to sell itself to Endo Health Solutions for about $1.6 billion. The purchase, to be made mostly through stock, values each Paladin share at C$77, a 20 percent premium to yesterday’s closing price.
Encana, Canada’s largest natural gas producer, rallied 3 percent to C$19.15, the most in almost two months. The company will focus spending in 2014 on five oil and liquids areas including the Duvernay, Montney, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale while cutting 800 jobs.
The Calgary-based company, which has maintained a 20-cent quarterly dividend since 2009, today lowered the payout to 7 cents.