Thursday, September 10, 2009

Canadian Banks Positive as Natural Gas Prices Rise

By Matt Walcoff

Sept. 10 (Bloomberg) -- Canadian stocks rose, led by energy companies, as the Bank of Canada said growth in the second half of 2009 may be stronger than earlier projected and natural gas prices climbed for a fourth day.

Royal Bank of Canada and Bank of Nova Scotia advanced after the central bank kept its key interest rate at a record low. Magna International Inc., Canada’s largest auto-parts company, gained 3.5 percent after winning the battle for General Motors Co.’s Opel unit. Suncor Energy Inc., Canada’s biggest energy company, gained 3.1 percent as natural gas rallied.

The Standard & Poor’s/TSX Composite Index rose 103.17 points, or 0.9 percent, to 11,103.34 at 12:10 p.m. in Toronto. The benchmark index has surged 47 percent since March 9 as commodity prices have rebounded on economic data showing the global recession is easing.

“The comments by the Bank of Canada this morning seem to underscore the fact that the recovery is in place, and they’re fighting now on how quick it’s going to be,” said Rick Hutcheon, chief investment officer of RKH Financial in Toronto. Even central bankers “are taken aback by the pace at which the economy seems to be expanding,” he said.

The Bank of Canada kept its key interest rate at a record- low 0.25 percent. The central bank said information on inventory adjustments and automotive production suggests economic growth in the second half of the year may surpass the bank’s July projection of 1.3 percent on an annualized basis. Royal Bank gained 0.4 percent to C$56.11. Bank of Nova Scotia climbed 1.6 percent to $44.57.

GM Board’s Selection

Magna added 3.5 percent to C$49. GM’s board selected Magna as the lead buyer of a 55 percent stake in Opel, GM’s European- based unit. Magna had been competing with RHJ International SA of Belgium for the car line. German Chancellor Angela Merkel had backed Magna’s bid on hopes the Aurora, Ontario, company would help save most of the Opel jobs in Germany.

Natural gas futures rebounded from early declines after the Energy Department said U.S. stockpiles rose less than forecast last week. Natural gas for October delivery rose 6.5 cents, or 2.3 percent, to $2.894 per million British thermal units on the New York Mercantile Exchange.

Suncor, which completed the purchase of Petro-Canada last month, rose 3.1 percent to C$35.85. Encana Corp., the world’s largest natural-gas producer, gained 1.4 percent to C$58.63. Its leading rival, Canadian Natural Resources Ltd., added 1.7 percent to C$67.36.

Raw-Materials Producers Rise

All 10 industries on the S&P/TSX advanced, led by a 1.6 percent jump in raw-materials producers.

With gold prices fluctuating, the largest bullion producers, Goldcorp Inc. and Barrick Gold Corp. rallied at least 2.1 percent. Silver Standard Resources Inc. gained 4.3 percent to C$23.56 as silver for December delivery rose 0.3 percent in New York.

BlackBerry-maker Research In Motion Ltd., Canada’s largest technology company, advanced 0.9 percent to C$85.07. Texas Instruments Inc. increased its third-quarter sales and profit forecasts because of improving demand for chips used in some industrial applications, computers and consumer electronics.

Transat A.T. Inc., Canada’s biggest tour operator and the owner of airline Air Transat, led S&P/TSX stocks with a 6.6 percent gain to C$13.65. The Montreal-based company reported third-quarter earnings of 20 cents a share, excluding certain items, more than doubling the average estimate of analysts surveyed by Bloomberg. Fellow carrier WestJet Airlines Ltd. plunged 4.8 percent to C$11.14 after saying yesterday that it will raise about $150 million in a share sale.

To contact the reporter on this story: Matt Walcoff in Toronto at

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