TORONTO (Reuters) - Canada’s main stock index jumped on Monday, as shares of Canadian Oil Sands COS.TO surged 55 percent on a hostile bid by Suncor Energy Inc (SU.TO), its rival and co-producer in the country’s oil sands industry.
The Alberta oil sands are a leading source of U.S. crude imports, but slumping oil prices have squeezed producers in a region whose operating costs are among the world’s highest.
“For a company with as strong a balance sheet as Suncor it’s a good move to go after assets like that,” said Bryden Teich, associate portfolio manager at Avenue Investment Management, a long-time Suncor shareholder.
He said the bid has a strong chance of succeeding, and that Imperial Oil (IMO.TO) may also take a look. A source familiar with the matter has said Canadian Oil Sands will reject the bid.
The rise in Canadian Oil Sands helped drive up the overall energy group 4.5 percent. Canadian Oil Sands shares ended at C$9.60, topping the value of the all-stock offer of C$8.84 a share.
Penn West Petroleum PWT.TO and Meg Energy Corp (MEG.TO), both the subject of persistent speculation they could be acquisition targets, also gained. Penn West rose 22.4 percent at C$1.04 while MEG rose 21.8 percent to C$10.11.
Suncor slipped 2.2 percent to C$34.60.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended up 212.46 points, or 1.59 percent, at 13,552.20, in a broad rally that left only 19 out of 242 stocks in the red.
An agreement to liberalize commerce in 40 percent of the world’s economy reached on Monday by Pacific trade ministers was also cheered, though its impact was considered difficult to measure in the near term.
“Unless you’re a dairy farmer there were a lot of positives for global trade as a part of the deal, so that could have been of the impact on the market on the positive bounce,” Teich said.
The deal could reshape industries, change the cost of products from cheese to cancer treatments and have repercussions for drug companies and automakers.
Nine of the index’s 10 main sectors gained, though healthcare fell 2 percent. Heavyweight Valeant Pharmaceuticals (VRX.TO) fell 11.1 percent to C$213.10 amid heavy criticism of its pricing practices.
Banks also helped prop up the index, with Toronto-Dominion Bank (TD.TO) adding 1.6 percent to C$52.45 and Bank of Nova Scotia (BNS.TO) advancing 2 percent to C$58.38. Financials overall climbed 1.7 percent.
Editing by Chizu Nomiyama, W Simon and Leslie Adler