Canadian Stocks Rise as Financial Companies Gain; RIM Tumbles
Canadian stocks rose for the first time in four days as equities rebounded from their lowest prices relative to earnings since August, led by financial companies and raw-materials producers.
Manulife Financial Corp. (MFC) climbed 2.5 percent after an analyst at Toronto-Dominion Bank (TD) raised his rating on the insurer. Agrium Inc. (AGU), Canada’s second-largest fertilizer producer, advanced 4.6 percent after saying retail sales and higher fertilizer prices will increase earnings. BlackBerry maker Research In Motion Ltd. (RIM) fell 6.7 percent, extending its loss to a second session, after cutting its profit forecasts.
The Standard & Poor’s/TSX Composite Index rose 67.75 points, or 0.5 percent, to 12,857.70. The S&P/TSX fell 7.3 percent this month through June 17 to a seven-month low as weaker-than-forecast data on U.S. manufacturing and industrial production and an intensifying European debt crisis fanned concern that growth will slow. S&P/TSX stocks traded at an average price-to-earnings multiple of 18.14, the lowest since Aug. 26.
“We’re experiencing some bearish fatigue,” said Gerry Brockelsby, a money manager at Marquest Asset Management Inc. in Toronto, which oversees C$250 million ($255 million). “The valuations are looking fine. The bad news is built into the market.”
Manulife, North America’s fourth-biggest insurer, increased 2.5 percent to C$15.95 after closing at a six-month low June 17. Doug Young, an analyst at TD, raised his rating to “buy” after having a “hold” rating on the shares for 11 months.
All other S&P/TSX insurers climbed, as did seven of the eight banks in the index. Power Corp. of Canada, the Desmarais family’s financial holding company, gained 1.6 percent from a nine-month low to C$26.07. TD, the country’s second-biggest lender by assets, rose 0.8 percent to C$78.92.
Fertilizer producers rallied today after Agrium raised its second-quarter profit forecast to a range of $4.10 a share to $4.40 a share from last month’s estimate of $3.38 a share to $3.88 a share.
Horst Hueniken, an analyst at Stifel Financial Corp., said in a note to clients that investors should buy fertilizer stocks. Last week’s decline in industry shares was an overreaction to the U.S. Senate’s vote to eliminate an ethanol tax break, he said.
Agrium gained 4.6 percent, the most this year, to C$81.63. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, advanced 1.8 percent to C$50.62.
Gold and silver producers advanced as European leaders meeting in Luxembourg failed to reach an agreement on a second bailout of Greece. Goldcorp Inc. (G), the world’s second-largest gold producer by market value, increased 2.3 percent to C$46.44. Silver Wheaton Corp. (SLW), Canada’s fourth-biggest precious-metals company by market value, climbed 3.6 percent to C$30.55.
Silvercorp Metals Inc. (SVM), which mines in China, surged 5.6 percent to C$8.35 after saying it will buy back up to 5.7 percent of its shares. Shares of the Vancouver-based company had slumped 49 percent from April 8 through June 17.
Uranium producers retreated after U.S. Interior Secretary Ken Salazar extended a moratorium on uranium mining on government-owned land near the Grand Canyon. Cameco Corp. (CCO), the world’s largest producer of the nuclear fuel, fell for a seventh day, slipping 2.5 percent to C$22.74. Denison Mines Ltd. decreased 7.8 percent to C$1.66, the lowest price since September.
RIM completed its biggest two-day decline since September 2008 after Pierre Ferragu, an analyst at AllianceBernstein Holding LP, cut the stock to “underperform” from “market perform.” The shares dropped 6.7 percent today to C$25.41.
Shares of the Waterloo, Ontario-based company plunged 22 percent June 17, after the company cut its earnings forecasts. RIM is losing a war in smartphones to Apple Inc. and devices using Google Inc.’s Android operating system, Ferragu said in a note to clients.
Sino-Forest Corp. (TRE), the forestry company fighting a short seller’s assertions of financial manipulation, sank 14 percent to C$2.73 after closing at a five-year low yesterday.
“Inconsistencies” have been found in the valuation of Sino-Forest’s holdings in China’s Yunnan province, Canada’s Globe and Mail said June 18, citing Chinese government officials and forestry experts it didn’t identify. In a statement, the company called the report an “incorrect portrayal.”
The S&P/TSX Telecom Services Index rallied the most in 15 months. The index has gained 8.7 percent this year as investors have sought stocks with higher-than-average dividend yields.
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