Canadian Stocks Rise on Oil, Fed Optimism; Suncor Energy Gains

Canadian stocks rose, led by energy producers including Suncor Energy Inc. as oil prices rallied above $77 a barrel this week. The Standard & Poor’s/TSX Composite Index headed for its highest close since May.

The market was also lifted by optimism the U.S. Federal Reserve will end two years of interest-rate increases today.

“With oil higher and an interest-rate pause the Canadian market should rise this week,” said Doug Davis, who helps manage $382 million as president of Davis-Rea Ltd. Investment in Toronto. If the Fed were to increase borrowing costs, “that would shock the market.”

The S&P/TSX added 70.28, or 0.6 percent, to 12,006.96 at 11:48 a.m. in Toronto. That would be the highest close since May 12. The Toronto Stock Exchange was closed yesterday for the Civic Holiday.

A gauge of energy producers, which accounts for 31 percent of the S&P/TSX’s value, advanced 1.7 percent for the best performance among 10 industry groups.

Crude oil for September delivery yesterday rose 3 percent to $76.98 a barrel in New York and touched $77.30 after BP Plc said it will temporarily shut down its Prudhoe Bay oilfield in Alaska. Oil today was little changed at $76.95.

Suncor Energy, the world’s biggest oil-sands miner, gained C$2.51 to C$95.71. Canadian Natural Resources Ltd., the country’s second-biggest natural-gas producer, climbed C$1.64 to C$60.54. Petro-Canada, the country’s No. 3 oil and gas company, increased 57 cents to C$51.02.

Fed Decision

Policy makers at the U.S. central bank will probably leave the benchmark lending rate at 5.25 percent, according to the median estimate of economists surveyed by Bloomberg News. That would be the first pause in rate increases after 17 meetings since June 2004. The announcement is due at 2:15 p.m. New York time.

Speculation that the Fed will pause today helped send gauges of utilities and telecommunications companies up 0.4 percent and 0.3 percent, respectively. Lower or stable interest rates make those companies’ dividends more attractive.

The utilities and phone indexes have average dividend yields of 4.8 percent and 2.9 percent, respectively. The S&P/TSX has an average yield of 2.5 percent.

“For dividend-paying stocks it’s a positive,” if the Fed holds rates steady, said Davis.

Fortis Inc., the utility owner, gained 95 cents to C$23.60. Telus Corp., Canada’s second-biggest phone company, increased 67 cents to C$49.97.

The following shares had unusual price changes. Stock symbols are in parentheses.

First Quantum Minerals Ltd. (FM CN) climbed C$2.25, or 4.3 percent, to C$54.55. The miner of copper in Africa said second- quarter net income rose fivefold to $150.5 million, or $2.28 a share, on higher prices and increased production. Sales more than quadrupled to $362.5 million.

Methanex Corp. (MX CN) gained 79 cents, or 3.7 percent, to C$22.38. The No. 1 producer of methanol was raised to “buy” from “neutral” by Jaret Anderson at UBS AG. The analyst wrote in a note that UBS increased its “long-term” methanol price forecast to $200 a tonne from $180.
Source: www.bloomberg.com