Canada Stocks Rise for 5th Day, Led by Nexen, Teck; Telus Drops

By John Kipphoff

Nov. 27 (Bloomberg) -- Canadian stocks rose for a fifth day, sending the main index toward its longest gain in seven months, as merger speculation boosted oil-sands producers and metal producers rallied on the prospect of renewed China demand.

Nexen Inc. surged 17 percent as the co-owner of an oil-sands project in Alberta extended weeklong gains on speculation that it may become the target of a takeover bid. Teck Cominco Ltd. rallied 16 percent after China cut rates yesterday to boost growth. Goldcorp Inc. led bullion producers higher as gold traded close to a five-week high.

“Nexen is moving on takeover rumors,” said Martin Anstee, a fund manager at Stone Asset Management in Toronto, which oversees about $800 million. “There’s some bottom-fishing in the miners. These stocks have come down so far. How much lower can metals prices go?”

The Standard & Poor’s/TSX Composite Index added 1.3 percent to 8,753.77 in Toronto. Trading was below average as stock and bond markets in the U.S. closed for the Thanksgiving holiday.

The S&P/TSX, which gets three-quarters of its value from financial, energy and raw-materials companies, has fallen 37 percent this year, on course for its worst annual drop after global credit losses approached $1 trillion and commodities slumped on concern a recession will destroy demand.

Nexen rose C$3.73 to C$26.01. The co-owner of the Long Lake oil-sands project in Alberta climbed for a fifth day. Nexen reiterated yesterday that it “isn’t for sale” after speculation revived that it may become the target of a takeover bid from an international oil company looking to boost reserves.

Opti Canada Inc., Nexen’s partner in Long Lake, surged 43 percent to C$2.57. Suncor Energy Inc., the world’s second-largest oil-sands producer, added 2.6 percent to C$26.86. Talisman Energy Inc., which like Nexen has oil and gas wells in the U.K. North Sea, gained 9.1 percent to C$11.88.

China Rate Cut

Teck Cominco rose 78 cents to C$6.05, taking a two-day rally to 45 percent.

Canada’s biggest diversified mining company jumped for a second session as copper and other commodities gained yesterday after China, the biggest consumer of the metal, lowered borrowing costs. Teck declined 88 percent this year by Nov. 25 as the global credit crisis reduced demand for metals and on investor concern that the company may have trouble repaying debt it took on to make acquisitions.

Goldcorp, the second-largest miner by market value, rose 2.6 percent to C$33.60. Barrick Gold Corp. added 2.4 percent to C$36.49. Agnico-Eagle Mines Ltd., owner of Canada’s largest gold deposit, gained 4.1 percent to C$46.01. Gold for immediate delivery added 0.3 percent to $813.33 an ounce in London.

Telus fell 3.7 percent to C$36.69. Canada’s second-biggest phone company may revive an attempt to merge with BCE Inc., whose buyout by Ontario Teachers’ Pension Plan is unlikely to be close, Scotia Capital analyst John Henderson said.

Telus Interest

Telus Corp. “remains very interested in entering merger discussions” with BCE, Henderson, based in Toronto, wrote in a note to clients, without saying where he got the information. Shawn Hall, a spokesman for Telus, declined to comment.

BCE, whose C$52 billion ($42 billion) takeover is in doubt after the company’s auditor said yesterday that the transaction would leave the company insolvent, fell 0.2 percent to C$25.20.

Henderson cut BCE to “sector perform” from “sector outperform.” BCE, Canada’s largest phone provider, was also downgraded to “neutral” from “buy” by Jeffrey Fan at UBS AG. A Telus-BCE combination is unlikely to be approved by Canadian regulators, the analyst said in a report.

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