Canada Stocks Advance as Gold, Silver Gains Offset Energy Slump

Canadian stocks rose for a fifth straight day as an increase in gold and silver prices offset declines in energy shares.

Raw-materials producers advanced as Detour Gold Corp. and OceanaGold Corp. climbed at least 4.8 percent. Longview Oil Corp. jumped 14 percent after receiving an unsolicited, non-binding takeover offer from a public oil and gas company. HudBay Minerals Inc. lost 6.1 percent after making a C$360 million ($326 million) unsolicited offer to acquire the rest of Augusta Resource Corp. Augusta soared 27 percent.

The Standard & Poor’s/TSX Composite Index increased 7.68 points, or 0.1 percent, to 13,794.18 at 4 p.m. in Toronto. The gauge is up 1.3 percent this year. Trading in S&P/TSX stocks was 13 percent below the 30-day average at the close.

“Today, all seems calm,” said David Baskin, president of Baskin Financial Services in Toronto. The firm manages C$600 million. “There has been a mini-correction in the TSX, but the fundamentals are still supporting stocks.”

U.S. Federal Reserve Chairman Janet Yellen will speak on monetary policy and the outlook for the U.S. economy tomorrow for the first time after being sworn in as the central bank’s head on Feb. 3. The Fed chairman will testify before the House Financial Services Committee in a semi-annual report. The Fed has already decided to slow the pace of its asset-purchase program twice, reducing its monthly buying of bonds to $65 billion from $85 billion in 2013.

Economic Data

The Fed is studying employment and other economic data to determine when next to taper its stimulus program. A Labor Department report on Feb. 7 showed that U.S. payrolls rose by a less-than-projected 113,000 in January, while the unemployment rate unexpectedly dropped to the lowest level in more than five years.

Consumer sentiment in Canada fell to the lowest since May on speculation the nation’s economic outlook is worsening. The Bloomberg Nanos Canadian Confidence Index declined to 56.0 in the week ending Feb. 7 from a previous reading of 56.6, the fourth straight drop. Persistently low inflation, a widening trade deficit and the worst-performing currency in the Group of 10 this year are chipping away at the perception Canada is immune from the global downturn.

OceanaGold Gains

Seven of 10 main industries in the S&P/TSX declined today. Health-care companies gained 0.4 percent, while energy and consumer-discretionary shares slid at least 0.5 percent.

Raw-materials shares climbed 1.8 percent. OceanaGold advanced 5.3 percent to C$2.40, the highest level since April, while Detour added 4.8 percent to C$8.23. Macquarie Capital Markets analyst David Doyle recommended buying OceanaGold and Detour shares in a note today.

Investors should sell copper stocks and use the proceeds to be “at least” equal weight on gold equities, Doyle wrote. Gold for April delivery rose 0.9 percent to $1,274.70 an ounce in New York.

Fortuna Silver Mines Inc. gained 2.4 percent to C$4.68 and Silvercorp Metals Inc. increased 3.8 percent to C$3.02. Silver for March delivery climbed 0.9 percent for its sixth day of gains.

Longview Oil jumped 14 percent to C$5.05. The Calgary-based drill operator formed a committee to consider the proposal, which is a premium to the closing trading price of Longview shares relative to the closing price of the interested company’s shares on the date the offer was received.

HudBay dropped 6.1 percent to C$8.83. HudBay, which already owns 16 percent of Augusta, offered to acquire the Vancouver-based mineral explorer to add a copper-mining project in Arizona.

HudBay said yesterday in a statement it will offer 0.315 of a share for each of Augusta’s. The per-share offer is worth about C$2.96 and represents a bid premium of 18 percent, based on Feb. 7 closing prices, Toronto-based HudBay said.

Augusta soared 27 percent to C$3.20, its highest level since February 2012.

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