CANADA STOCKS-TSX rises as energy, CP Rail gains outstrip gold fall

Wed Dec 5, 2012 3:42pm EST
 
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* TSX rises 50.21 points, or 0.41 percent, to 12,187.39
    * Eight of 10 main sectors advance
    * CP Rail up 5 percent after job cuts
    * Primaris Retail gains 14 percent after buyout offer

    By John Tilak
    TORONTO, Dec 5 (Reuters) - Canada's main stock index rose on
Wednesday, led by energy stocks on optimism about Chinese
economic growth and by a rally in Canadian Pacific Railway Ltd
 on its plan to cut jobs in a bid to lower costs and
increase efficiency.
    Chinese Communist Party chief Xi Jinping said China will
maintain its fine-tuning of economic policies in 2013 to ensure
stable economic growth. Policies in China, one of the world's
biggest commodities consumers, can have an impact on the
resource-heavy Canadian market. 
    Energy shares rose 1.1 percent. Suncor Energy Inc 
was up 1.6 percent at C$32.78, and Canadian Natural Resources
Ltd advanced 1.6 percent to C$27.86. 
    "There are expectations of better global growth, driven by
ongoing U.S. budget talks and speculation that the Chinese
economy is turning around for the better," said Elvis Picardo,
strategist and vice president of research at Global Securities
in Vancouver.
    "There is also some degree of takeover speculation. Many
Canadian energy producers are trading at pretty attractive
valuations. The M&A activity in the U.S. certainly points to the
attractiveness of energy assets in North America," Picardo said.
    U.S. miner Freeport-McMoRan Copper & Gold Inc said
on Wednesday it has struck a deal to buy Plains Exploration &
Production Co and McMoRan Exploration Co for a
total of $9 billion to diversify into the energy sector.
 
    At midafternoon, the Toronto Stock Exchange's S&P/TSX
composite index was up 50.21 points, or 0.41 percent,
at 12,187.39. Eight of its 10 main sectors were trading higher.
    Canadian Pacific Railway gained 5.2 percent to C$97.85 after
the country's second-biggest railroad said it plans to cut 4,500
jobs by 2016 as part of a drive by its new CEO to slash costs.
The company played one of the biggest roles in leading the
market higher. 
    "This is what shareholders have been looking for. This is
what they have been hoping - that CP will face the challenges
that they have. The new CEO is making his mark," said Fred
Ketchen, director of equity trading at ScotiaMcLeod.    
    Financials, the index's biggest sector, gained 0.6 percent,
led by Royal Bank of Canada. Royal, Canada's biggest
bank, was up 1.3 percent at C$59.18 and played the biggest role
of any single stock in leading the market higher.
    "The Canadian banks have been firing on all cylinders this
year. (They) may also be benefiting today from improved
sentiment for banks in general, helped by Citigroup's gains on
cost-cutting and Bank of America's advance past $10 for the
first time since July 2011," Picardo said.
    Also boosting the market was Primaris Retail REIT
, whose shares rose 14.1 percent to C$26.28 after a
consortium led by Canada's KingSett Capital offered about C$2.6
billion ($2.62 billion) to acquire the Canadian shopping mall
owner. 
    The index's rise was limited by falling gold mining stocks,
hurt by a drop in gold prices to one-month lows. 
    Goldcorp Inc shed 2.1 percent to C$37.05, Barrick
Gold Corp fell 1.9 percent to C$33.31, and Eldorado
Gold was down 3.2 percent at C$13. 44. As a result, the
index's materials sector, which includes mining stocks, lost 0.7
percent.
    Vincent Delisle, an investment strategist at Scotiabank,
said the Toronto market was likely to struggle for the remainder
of 2012.
    "I don't see a year-end bounce, if anything there is a
year-end fall, a slight decline. I'm not looking for a Santa
Claus rally," he said.
    The Scotiabank strategist said he sees the benchmark S&P/TSX
index rising to 12,800 next year and recommended investors be
overweight in the energy, materials and industrials sectors, and
underweight in consumer discretionary, financial, telecom and
utility stocks.