BLBG: Canadian Stocks Rise as Gold Gains, Borrowing Costs Fall
By Whitney Kisling
Nov. 3 (Bloomberg) -- Canadian stocks rallied from the worst monthly drop in a decade, as bullion producers advanced on rising gold prices and financial shares jumped as borrowing costs in dollars fell to the lowest level in more than a month.
Gold producers Kinross Gold Corp. and European Goldfields Ltd. led an index of materials stocks on the Toronto Stock Exchange higher, while insurer Manulife Financial Corp. paced financial shares. Energy companies EnCana Corp. and Canadian Natural Resources Ltd. declined as crude oil dropped.
The Standard & Poor's/TSX Composite Index, which derives three-quarters of its value from energy, materials and financial shares, rose 0.4 percent to 9,800.24 at 11:05 a.m. in Toronto, as 141 stocks rose and 100 declined.
The London interbank offered rate, or Libor, that banks charge for three-month loans in dollars dropped to its lowest level since the Sept. 15 collapse of Lehman Brothers Holdings Inc., falling 17 basis points to 2.86 percent.
``That shows there's a little more optimism that we're coming through the credit crisis,'' said Laura Wallace, who helps oversee about $300 million as managing director at Coleford Investment Management Ltd. in Toronto. ``So you're getting some sighing in the credit markets.''
Manulife, the country's biggest insurance company, rose for the first time in three days, gaining 5.5 percent to C$25.45.
Alternative Investment
Gold futures for December delivery climbed $8, or 1.1 percent, to $726.20 an ounce at 9:24 a.m. on the Comex division of the New York Mercantile Exchange, as the dollar declined against the euro, boosting the appeal of the precious metal as an alternative investment.
Kinross Gold Corp., the world's fourth-largest gold producer, rallied 4.9 percent to $13.17. European Goldfields gained 23 percent to C$1.85.
Materials shares in the S&P/TSX index gained 1.3 percent. Potash Corp. of Saskatchewan Inc., the biggest maker of fertilizers climbed as wheat prices advanced 4.3 percent. The shares rose 1.1 percent to C$103.75.
A measure of energy stocks lost the most on the S&P/TSX, declining 1.7 percent after crude oil declined on concern that a demand slowdown is spreading to emerging markets. EnCana Corp., the nation's biggest natural-gas producer, fell 2 percent to C$60. Canadian Natural Resources Ltd., the nation's fourth- largest energy company, lost 3.4 percent to C$58.77.
To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net.
