Canadian Stocks Rally as EnCana, Toronto-Dominion Bank Rebound

By John Kipphoff

Oct. 23 (Bloomberg) -- Canadian stocks gained for the first time in three days, led by energy companies, after crude oil- prices rallied from a 16-month low and EnCana Corp. reported earnings that beat analysts' estimates.

Toronto-Dominion Bank paced an advance among financial shares after Canada said it will provide guarantees on commercial bank debt to revive lending and match bailouts offered by other countries. Teck Cominco Ltd. declined, leading raw-materials producers to a three-year low, as copper and gold prices slumped and the miner reported lower profit.

The Standard & Poor's/TSX Composite Index rose 1 percent to 9,331.35. Canada's benchmark, which derives three-quarters of its value from commodity and financial shares, dropped a much as 3.8 percent earlier to the lowest since December 2004.

``For Canada to rally, we have to get confidence to return,'' said Tony Demarin, who oversees about $75 million as chief investment officer at BCV Asset Management Inc. in Winnipeg. ``Commodity prices have to stop falling.''

The S&P/TSX has fallen 21 percent in October, poised for its steepest monthly drop since the crash of October 1987, as oil, metals and grain prices slumped on concern that more than $660 billion in credit losses will slow down the global economy and destroy demand for the Canada's commodity-related assets.

EnCana rose 8.5 percent to C$55.05. Canada's largest gas producer said third-quarter profit more than tripled to $3.55 billion. Excluding such items as a $2 billion gain in the value of hedging contracts, profit was $1.92 a share, 15 cents higher than the average of 15 analyst estimates compiled by Bloomberg.

Profit Gain

Petro-Canada gained 9.4 percent to C$27.80. The country's third-largest oil company said third-quarter profit rose 61 percent to C$1.25 billion, beating analyst estimates. Petro- Canada also said that it may pare back plans to develop its Fort Hills oil-sands project with partner UTS Energy Corp., after the mine's cost estimate climbed by 50 percent to C$23.8 billion.

UTS added 4 percent to C$1.03, paring its drop this year to 81 percent

Imperial Oil Ltd., Canada's biggest oil and gas producer by output, surged 7.2 percent to C$39.11.

Crude oil rose 1.6 percent to $67.84 a barrel in New York after OPEC's president said that members had reached a consensus on the need to trim production and Iran said the cut may be as much as 2 million barrels a day.

Measures of energy and financial shares gained 3.3 percent and 1.7 percent today, respectively. For the month, the two groups are down 25 percent and 15 percent.

`Beaten Down'

``We had some better-than-expected results,'' Demarin said. ``After being beaten down, the energy business still has a lot of upside.''

Canada's government will provide guarantees on as much as C$218 billion ($173 billion) of commercial bank debt, Finance Minister Jim Flaherty told reporters today in Ottawa. The government has also agreed to buy as much as C$25 billion of mortgages from banks.

Toronto-Dominion, Canada's second-largest lender by assets, added 4.5 percent to C$58. Bank of Montreal, the country's fourth-biggest, gained 7.5 percent to C$44.24, the most since Oct. 14. Sun Life Financial Inc., the third-largest insurance company in Canada, advanced 7.8 percent to C$30.98.

Bank of Nova Scotia fell 3.9 to C$34.49 and earlier touched the lowest intraday price since November 2004. Canada's third- largest lender was downgraded by BMO Capital Markets analyst Ian de Verteuil, who cited rising loan losses and deteriorating emerging markets conditions.

Commodities Dip

Copper fell below $4,000 a metric ton in London for the first time since October 2005 and the Reuters/Jefferies CRB Index of 19 commodities touched its lowest level in four years. Gold dropped below $700 an ounce in New York.

Teck Cominco Ltd. slid 12 percent to C$12.54 and earlier fell 19 percent for a record intraday drop. Canada's largest diversified miner said third-quarter profit slid 13 percent to C$424 million, on lower zinc and copper prices.

Barrick Gold Corp., the biggest bullion miner in the world, fell 5.4 percent to C$23.64. Kinross Gold Corp., Canada's third- largest bullion mining company, dropped 11 percent to C$10.09.

A gauge of raw-materials stocks has fallen 39 percent this month, leading all 10 industries in the S&P/TSX lower.

To contact the reporter on this story: John Kipphoff in Montreal at jkipphoff@bloomberg.net.