Canada Stocks Resume Advance as Energy Producers Climb With Oil

  • Gibson Energy jumps after rejecting C$2.8B takeover offer
  • Valeant slumps on report of criminal probe into Philidor ties

Canadian stocks resumed their climb after snapping a five-day rally, as energy producers rose with crude oil to overshadow a selloff in Valeant Pharmaceuticals International Inc. sparked by reports it is facing a criminal probe from U.S. prosecutors.

The S&P/TSX Composite Index added 0.1 percent to 14,796.06 at 4 p.m. in Toronto, paring a gain of as much as 0.6 percent. Trading volume was 8.1 percent higher than the 30-day average. The S&P/TSX is the second-best performing developed market in the world this year, just behind New Zealand.

Energy producers added 0.9 percent for the highest close in a year, the biggest contributor to gains as six of 10 industries in the S&P/TSX advanced. Crude futures rose 4.3 percent in New York to reach the highest level in three weeks.

Gibson Energy Inc. surged 6.8 percent, the most since January, after the midstream energy facilities and infrastructure company reportedly rejected a C$2.8 billion offer from Asia Pacific Private Equity, according to the Financial Post. The takeout talk is seen as positive for the shares, according to RBC Dominion Securities analyst Robert Kwan.

Health-care stocks slumped to the biggest drop in the S&P/TSX. Valeant Pharmaceuticals lost 11 percent, the most in two months. U.S. federal prosecutors are investigating whether the drugmaker defrauded insurers by hiding its ties to mail-order pharmacy Philidor Rx Services LLC, the Wall Street Journal reported Wednesday. Valeant is cooperating with the probe, according to a statement.

Raw-materials producers ended the day down as well, retreating 0.5 percent as gold prices drifted negative. Kinross Gold Corp. and Agnico Eagle Mines Ltd. lost as much as 1.5 percent to pace declines in the group.

There were some pockets of gains in the group, as metals companies reported earnings. Silver Standard Resources Inc. soared 11 percent to the highest close in almost five years on second-quarter earnings triple that of analysts’ estimates. Torex Gold Resources Inc. jumped 8.7 percent to a record following its quarterly results, which showed production more than doubled from the previous quarter.

Mining and materials companies remain the top gainers this year among 10 industries in the S&P/TSX with a 64 percent advance, the best year-to-date performance for the category in at least 30 years according to data compiled by Bloomberg.

That’s boosted the Canadian equity benchmark to a 14 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 24 for the S&P/TSX, about 17 percent higher than the S&P 500 Index.

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