BLBG: Canada Stocks Rise, Led by Materials Producers, as Gold Climbs
By Elizabeth Stanton and Matt Walcoff
Dec. 1 (Bloomberg) -- Canadian stocks rose the most in a month, led by raw material and energy producers, as a drop in the value of the U.S. dollar pushed gold to a record and copper, silver and oil prices climbed.
Barrick Gold Corp., the world’s largest bullion producer, led materials producers to the biggest advance among 10 industry groups in the Standard & Poor’s/TSX Composite Index. Suncor Energy Inc., Canada’s largest oil company, rose more than 3.4 percent.
The S&P/TSX climbed 260.12 points, or 2.3 percent, to a 14- month high of 11,707.32. The main benchmark for Canadian equities is up 30 percent this year, compared with a 23 percent advance by the Standard & Poor’s 500 Index of U.S. companies. After closing at a five-year low on March 9, the Canadian benchmark has rebounded 55 percent.
“More international money wants to be invested in Canada, because of its strong currency, than in the U.S.” said Charles Marleau, who helps oversee about C$300 million ($287 million) at Palos Management Inc. in Montreal. “People are selling the U.S. dollar to buy riskier assets.”
The U.S. dollar fell 0.6 percent against a basket of six major currencies as worry over Dubai World’s debt problems continued to dissipate.
With investors looking for a hedge against the declining dollar, gold closed above $1,200 an ounce in New York for the first time. Crude oil climbed 1.5 percent to $78.47 a barrel after a report showed Chinese manufacturing expanded at the fastest pace in five years, bolstering hopes fuel demand will increase in Asia.
Commodity Weighted
Materials and energy producers combined account for about 46 percent of the value of Canadian stocks, compared with less than 15 percent of the value of U.S. equities. The U.S. Dollar Index has fallen 8.5 percent this year, and closed at a 15-month low on Nov. 25, amid expectations the Federal Reserve will keep U.S. interest rates low.
Barrick Gold rose 7.5 percent to a nine-month high of C$48.20 as all of the 44 materials producers in the S&P/TSX advanced. Barrick has completed the elimination of its gold hedges, giving it full leverage to the price of the precious metal, it said today. The change in the value of some gold hedges before they were eliminated will reduce fourth-quarter earnings by $300 million, Barrick said.
Aura Minerals Inc., which bought a Honduras gold mine from Yamana Gold Inc. in August, soared 23 percent to a 14-month high of $4.90. Analyst Tom Meyer of Raymond James Financial Inc. raised his 12-month target price on Aura Minerals 50 percent to C$9, telling clients “copper and gold fundamentals are improving with each passing day.”
Drilling Results
Silver Standard Resources Inc. surged 9.1 percent to C$24.75 after announcing favorable drilling results at two gold- mining projects in northern British Columbia, Canada.
Suncor added 3.4 percent to $39.20 after National Bank of Canada analysts added the Calgary company to its new “Action List” of most-recommended stocks. EnCana Corp., which is spinning off most of its oil operations, gained 1.9 percent to C$57.63. Contract driller Major Drilling Group International Inc. jumped 6.8 percent to C$24.67.
Grocery-store chain Metro Inc. gained 5.9 percent, the most in six months, to C$38.45. Royal Bank of Canada added it to its “Strategy Focus List” of recommended stocks, analyst Irene Nattel said.
The Canadian dollar strengthened 1.3 percent to C$1.0469 per U.S. dollar, from C$1.0562 yesterday.
To contact the reporters on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
