By John Kipphoff Dec. 15 (Bloomberg) -- Canadian stocks rose for a second day, led by gold mining and energy shares, after oil climbed on expectations of production cuts and bullion prices surged as a slumping U.S. dollar boosted demand for precious metals. Barrick Gold Corp. rose to a two-month high along with bullion as the U.S. dollar fell against 16 of the 17 most actively traded currencies, including its Canadian counterpart. Suncor Energy Inc. rose more than 4 percent after OPEC’s Secretary-General Abdalla El-Badri said the group needs to make a “sizable” output cut this week. Manulife Financial Corp. fell, leading insurers and banks lower, on speculation a deepening North American recession will cut earnings after a report showed manufacturing in New York contracted at the fastest pace on record. The Federal Reserve begins a two-day meeting today to decide whether to cut interest rates again tomorrow to bolster the worsening economy. The Standard & Poor’s/TSX Composite Index rose 0.6 percent to 8,568.13 at 12:36 p.m. in Toronto “The U.S. dollar decline is putting a lift into commodities, gold especially,” said Ian Nakamoto, director of research at MacDougall MacDougall & MacTier Inc. in Toronto, which manages about C$3.5 billion. “Governments and central banks realize they have to throw everything they’ve got at the problem. People are picking up on the reflation trade. Confidence is still lacking in the financial sector.” The main Canadian equity benchmark has still fallen 38 percent in 2008, poised for its steepest annual drop, after slumping commodity prices and global credit losses of almost $1 trillion dragged down energy, mining and finance shares that account for three-quarters of the index’s value. Barrick, the world’s biggest gold producer, climbed 5.9 percent to C$41.20 and earlier rose to C$41.44, the highest intraday price since Oct. 10. Goldcorp Inc., the second-largest god miner by market value, gained 8.4 percent to C$37.72. Kinross Gold Corp., the nation’s third-biggest bullion mining company, climbed 4.5 percent to C$21. 41. Agnico-Eagle Mines Ltd., owner of Canada’s biggest gold deposit, jumped 12 percent to C$54.39. Gold futures rose 2.2 percent to $838.50 an ounce in New York and earlier touched $843.70, the highest since Oct. 16. Last week, the U.S. dollar tumbled 4 percent, the most since September 1985, while gold jumped 9.1 percent. The metal climbed to a record in March as interest-rate cuts by the Federal Reserve sent the dollar to an all-time low against the euro. Suncor, the world’s second-largest oil-sands producer, advanced 4.4 percent to C$26.17. Canadian Natural Resources added 3.8 percent to C$47.70. EnCana Corp., Canada’s biggest energy company by market value, gained 1.5 percent to C$55.77. Crude oil for January delivery rose 1.4 percent to $46.93 a barrel in New York and earlier increased to $50.02, the highest price since Dec. 2. The Organization of Petroleum Exporting Countries, which pumps 42 percent of the world’s oil, will probably lower output targets by at least 2 million barrels a day at a Dec. 17 meeting, according to 18 of 33 analysts surveyed by Bloomberg. Oil gained 13 percent last week after dropping by $100 a barrel from a July record. BCE Inc. rose 3.3 percent to C$21.93. The phone company whose C$52 billion ($42.4 billion) leveraged buyout collapsed last week was upgraded to “sector outperform” at Scotia Capital. ‘Very Attractive Levels’ The shares trade at “very attractive levels,” Scotia analyst John Henderson said in a note to clients. He raised his recommendation on BCE from his prior “sector perform” rating, and reiterated a 12-month share-price estimate of C$30. Separately, the company had its credit rating raised two levels by Standard & Poor’s, which said that it doesn’t expect BCE to take on other “leveraging strategies,” now that the buyout that would have loaded it with about $34 billion in debt has been abandoned. Manulife Financial slipped 2.7 percent to C$20.42. Canada’s biggest insurance company has its share-price target lowered by at least two analysts today after it completed a C$2.275 billion share sale last week to shore up capital. Bank of Nova Scotia declined 2 percent to C$30.28. National Bank of Canada, the nation’s sixth-largest lender, fell 4.6 percent to C$29.09 amid concern that there will be further delays to a plan to restructure C$32 billion in frozen asset-backed commercial paper. National Bank held about C$2.2 billion of the insolvent debt as of Oct. 31. To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.

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