Canadian Stocks Rise as Precious-Metals Shares Gain With Gold

After it was announced the consumer confidence dropped to their lowest level since April 2009, precious metals jumped up and are back on the rise. Since the economy seems to be getting weaker, many are preparing for another round on stimulus to help the economy.

Tuesday, August 30, 2011
Editors: Joanna Ossinger, Stephen Kleege
San Francisco Chronicle

Aug. 30 (Bloomberg) -- Canadian stocks rose for a third day, led by precious-metals producers, as gold and silver gained after an index of U.S. consumer confidence dropped to its lowest level since April 2009.

Barrick Gold Corp., the world's largest gold producer, advanced 1.6 percent after the U.S. Federal Reserve said some policy makers favored more stimulus. Bank of Nova Scotia, Canada's third-biggest lender by assets, climbed 2.2 percent after reporting earnings that beat the average analyst estimate. BlackBerry maker Research In Motion Ltd. increased 6.4 percent, rallying for a second day after an analyst at Macquarie Group Ltd. raised his price estimate on the shares.

The Standard & Poor's/TSX Composite Index rose 129.86 points, or 1 percent, to 12,634.71. Precious-metal prices rallied on investor demand for a haven after the Conference Board's index had the biggest point drop since October 2008 as the Americans' outlooks for employment and incomes soured.

"You have a situation where stimulus could be bad for the currency and good for gold," Daniel L. Bain, chief investment officer at Thornmark Asset Management Inc. in Toronto, said in a telephone interview. Bain oversees C$400 million ($409 million). "You also have the possibility for a weaker economy, which would also be bad for the currency and good for gold."

The S&P/TSX has lost 2.4 percent this month, the second- smallest decline among major developed-market stock benchmarks behind New Zealand's. Gold stocks in the index have jumped 12 percent, which would be their biggest monthly advance in a year, as precious metals climbed on concern the global economic recovery is slowing.

U.S. Stimulus

"A few members" of the Federal Open Market Committee sought more aggressive action to stimulate the economy and lower unemployment at the group's Aug. 9 meeting, the central bank said today. The Fed pledged to keep its key interest rate at a record low until mid-2013 at that meeting.

Earlier today, the European Commission said its index of executive and consumer sentiment in the 17-country euro region dropped the most since December 2008.

Gold rose 2.1 percent in New York. Barrick gained 1.6 percent to C$49.76. Goldcorp Inc., the world's second-largest gold producer by market value, advanced 1.7 percent to C$51.14. Gabriel Resources Ltd., which is developing a gold project in Romania, surged 11 percent, the most since November, to C$7.44.

Silver Wheaton Corp., Canada's fourth-biggest precious- metals company by market value, increased 2.3 percent to C$38.77 as silver surged 2.1 percent. Silvercorp Metals Inc., which operates in China, jumped 11 percent, the most since November, to C$8.72.

Bank Profit

Scotiabank increased 2.2 percent to C$53.50 after its third-quarter profit surpassed the average estimate in a Bloomberg survey by 2.2 percent, excluding certain items.

National Bank of Canada, the country's sixth-biggest lender by assets, climbed 1.3 percent to C$71.50. Canadian Imperial Bank of Commerce, which is scheduled to disclose third-quarter earnings tomorrow, rallied 1.6 percent to C$73.06.

RIM gained 6.4 percent to C$31.91, extending its August surge to 33 percent. The company is heading for its biggest monthly advance since April 2009 as analysts including Kevin Smithen of Macquarie and Shaw Wu of Sterne, Agee & Leach Inc. have said that its new smartphones may help stop the long-term decline in its share price. Shares of the Waterloo, Ontario- based company remain down 45 percent on the year.

Energy stocks advanced as crude oil futures increased 1.9 percent. Cenovus Energy Inc., Canada's fifth-largest energy company, climbed 2.2 percent to C$34.64. Suncor Energy Inc., the country's biggest oil and gas producer, rose 1.5 percent to C$31.02.

Joint Venture

Americas Petrogas Inc., which explores for oil and gas in Argentina, soared 24 percent to C$2.10 after agreeing to form a joint venture with Exxon Mobil Corp. Exxon Mobil will help fund the Los Toldos shale-oil and gas project.

Teck Resources Ltd., Canada's largest base-metals and coal producer, increased 3.6 percent to C$43.15 as copper advanced to a three-week high. Inmet Mining Corp., which produces base metals in Europe, surged 5.5 percent to C$62.28.

Alimentation Couche-Tard Inc., the owner of Mac's and Circle K convenience stores, sank 3.9 percent, the most since Feb. 7, to C$28.56. The company's first-quarter earnings trailed the average analyst estimate in a Bloomberg survey by 4.8 percent, excluding certain items.

--Editors: Joanna Ossinger, Stephen Kleege

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