CANADA STOCKS-Shoppers soars on Loblaw deal, TSX at 1-month high

Mon Jul 15, 2013 5:02pm EDT
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* TSX rises 66.17 points, or 0.53 percent, to 12,528.35
    * Eight of 10 main index sectors advance
    * Shoppers shares jump 24 percent after deal

    By John Tilak
    TORONTO, July 15 (Reuters) - Canada's main stock index rose
on Monday to a one-month high as a deal by grocer Loblaw Cos Ltd
 to buy Shoppers Drug Mart Corp for C$12.4 billion
($11.9 billion) boosted the pharmacy chain's shares and buoyed
broader market sentiment.
    Investors also digested data showing the Chinese economy
slowed in the second quarter and U.S. retail sales rose less
than expected in June.  
    The shares of Shoppers, the country's biggest pharmacy
chain, shot up more than 24 percent and had the biggest positive
influence on the market.
    Facing heightened competition from Target Corp and
Wal-Mart Stores Inc, Loblaw said it would create a
retail giant with more than C$42 billion in revenue and gain
access to the growing small-urban store sector. 
    "Loblaw has reorganized its business operations with a
vengeance," said Elvis Picardo, strategist and vice president of
research at Global Securities in Vancouver. "It spun off its
real estate operations into a REIT, and now it's come out of the
blue and made this big acquisition.
    "The very fact that the market reaction has been so
favorable indicates optimism that there's synergy there, that
it's not an acquisition that's made at a ridiculous price or at
a sky-high multiple."
    The Toronto Stock Exchange's S&P/TSX composite index
 closed up 66.17 points, or 0.53 percent, at 12,528.35,
after reaching 12,569.93, its highest since June 5.
    The benchmark Canadian index extended its advances from the
previous week, when it jumped the most in more than 7 months.
    "It does seem like sentiment is improving and appetite for
Canadian stocks is coming back," Picardo said.
    Eight of the 10 main sectors on the index were higher.
    Financials, the index's most heavily weighted sector, rose
0.5 percent.
    Royal Bank of Canada, the country's biggest lender,
rose 0.7 percent at C$62.26 and Bank of Nova Scotia was
up 0.3 percent at C$57.20.
    Gold miners helped drive gains in the materials group, which
was up 0.5 percent. 
    Barrick Gold Corp added 1.3 percent to C$15.69.
    The shares of energy producers fell slightly despite gains
in the price of oil. 
    Shoppers rose to C$60.12, while Loblaw gained 5.4 percent to
C$50.13. The two stocks helped lift the consumer staples sector
up 7 percent.