By John Kipphoff
Oct. 29 (Bloomberg) -- Canadian stocks rose, sending the main index to its best two-day gain in 32 years, as the U.S. dollar sank and commodities surged on the Federal Reserve's sixth interest-rate cut this year.
Nexen Inc. jumped 14 percent on better-than-expected earnings and a report that rival oil producers are considering bids for the company. Potash Corp. of Saskatchewan Inc. paced mining companies' biggest two-day rally on record as a gauge of commodities rose the most since 1956. Manulife Financial Corp. climbed a second day after a regulator relaxed capital requirements for insurers.
``It's pretty much about the Fed today,'' said Martin Roberge, portfolio strategist at Dundee Securities in Montreal. ``A huge decline in the U.S. dollar is a prerequisite for a commodity rally. We probably saw the market lows two days ago.''
The Standard & Poor's/TSX Composite Index rose 3.8 percent to 9,501.56 in Toronto, extending a two-day gain to 11 percent, its steepest rise since 1976. The measure increased 7.2 percent yesterday as investors took advantage of the cheapest share valuations on record.
Canada's stock benchmark, which derives three-quarters of its value from commodity and financial shares, has still dropped 19 percent in October, poised for its worst monthly decline in a decade, on speculation that the global credit crisis and equity rout will cause more losses at finance companies and that a recession will curb demand for Canadian commodity exports.
U.S. Dollar Slump
The U.S. dollar fell the most since 1998 against currencies of six major trading partners as the Fed sliced its target rate by a half-percentage point to 1 percent, matching the lowest level in half a century. It was the second cut this month after a 50 basis point reduction on Oct. 8 that the Fed coordinated with the Bank of Canada and the European Central Bank, among others. The Canadian dollar rose as much as 4.9 percent, the most in 37 years, against the U.S. currency.
A gauge of energy stocks climbed 7.5 percent and a measure of materials shares added 11 percent. The materials group, the worst performer this month in the S&P/TSX, notched a two-day gain of 22 percent, the biggest since 1987, when Bloomberg's records begin. It's still down 31 percent this month.
Oil climbed more than $4 a barrel in New York on speculation that lower borrowing costs may help revive demand for fuel and other resources. Corn rose the maximum allowed in Chicago and copper the most since 2006. The Reuters/Jefferies CRB Index of 19 raw materials traded in U.S. dollars increased 5.9 percent for its steepest gain since at least 1956, when data begin.
Nexen Jumps
Nexen climbed the most in two weeks, adding 14 percent to C$18.60. The oil and natural-gas producer reported third-quarter profit more than doubled to C$886 million, or C$1.66 a share, beating analyst estimates by 29 percent. The stock has still lost 25 percent of its value this month.
Total SA and Royal Dutch Shell Plc are considering takeover bids for Nexen, the Financial Times reported, without saying where it got the information. Chief Executive Officer Charlie Fischer, who retires this year, said the company hasn't been approached by any potential buyers and that it isn't for sale.
EnCana Corp., the country's biggest energy company by market value, increased 6.7 percent to C$59.20. Canadian Natural Resources Ltd. climbed 13 percent to C$58.25 and earlier surged 17 percent for its biggest intraday gain in 19 years.
Suncor Energy Inc. rose 10 percent to C$28.01. The world's second-largest oil-sands producer said third-quarter profit increased 30 percent to C$815 million, or 86 cents a share, from C$627 million, as crude prices surged to a record in July.
Potash rose 7.6 percent to C$96.68. The largest fertilizer maker by market value was raised to ``sector outperform'' from ``sector perform'' by Sam Kanes at Scotia Capital.
Gold Producers
Barrick Gold Corp., the biggest bullion miner, advanced 6.3 percent to C$27.90 as prices for the precious metal rose. Kinross Gold Corp., Canada's third-largest producer of the metal, jumped 19 percent to C$12.85.
Manulife gained 7.7 percent to C$25.30, taking a two-day advance from a four-year low to 20 percent. The country's biggest insurer was raised to ``outperform'' from ``neutral'' by Jim Bantis at Credit Suisse. The regulatory relaxation of capital ratios removes a ``capital raising overhang'' on the stock, the Toronto-based analyst wrote in a note to clients.
Research In Motion Ltd. fell 3.2 percent to C$58.83. The maker of the BlackBerry e-mail phones was rated ``market perform'' in new coverage by BMO Capital Markets analyst Keith Bachmann in New York, who set a share-price target of C$67.85. RIM had its share target cut at GMP Capital and Genuity Capital, while Paradigm capital increased its price estimate.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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