Canada Stocks Soar on Citigroup Aid; BCE, Suncor, Royal Gain

By John Kipphoff

Nov. 24 (Bloomberg) -- Canadian stocks rose a second day, led by BCE Inc., energy producers and banks, after the U.S. government rescued Citigroup Inc. with cash and guarantees, boosting investor confidence and resource prices.

BCE gained the most since July as concern abated that Citigroup, one of the largest lenders to the phone company’s $42.2 billion buyout, will renege on its financing commitments. Suncor Energy Inc. climbed the most in a month as oil surged, after a weaker U.S. dollar enhanced the appeal of investing in commodities priced in the American currency.

“There’s a relief rally,” said Paul Gardner, a money manager at Avenue Investment Management in Toronto, which oversees about $81 million. “The Citigroup bailout solved the immediate concern about short term liquidity.”

The Standard & Poor’s/TSX Composite Index added 3.5 percent to 8,440.87 in Toronto after gaining 5.6 percent on Nov. 21. More than two stocks rose for every one that fell.

The S&P/TSX fell 9.9 percent last week to a five-year low and has slid 44 percent from its June peak as financial companies’ credit and investment losses mounted and raw- materials and energy shares were dragged lower by tumbling energy, metal and grain prices.

Citigroup received a U.S. government rescue package that shields the bank from losses on $306 billion of U.S. home loans and injects $20 billion of capital, bolstering the stock after its 60 percent plunge last week.

Financing

BCE surged 9.8 percent to C$37.94 for its steepest gain since July 4. Citigroup, Deutsche Bank AG, Royal Bank of Scotland and Toronto-Dominion Bank have promised to provide $34.3 billion of loans, high-yield bonds, and equity to finance the record buyout of Canada’s biggest phone company.

Crude oil for January delivery rose 9.2 percent, to $54.50 a barrel in New York. Oil has dropped 63 percent from its July 11 record. Copper futures rose 6 percent to $1.6735 a pound. Wheat rose the most in almost four weeks in Chicago.

Suncor Energy, the world’s second-largest oil-sands mining company, gained 11 percent, the most since Oct. 20, to C$22.95, the most since Oct. 20. Canadian Natural Resources Ltd. rose 8.2 percent to C$45. EnCana Corp., Canada’s biggest energy company by market value, climbed 4.8 percent to C$51. Petro-Canada climbed 10 percent to C$24.75.

Cameco Corp. added 17 percent to C$19.60. Uranium prices climbed a fourth week, the longest win streak this year, as producers curb development of mines and utilities bought on concern prices will keep rising. Cameco was also raised to “sector outperform” from “sector perform” at Scotia Capital.

Profit

Royal Bank of Canada gained even after saying today that fourth-quarter profit fell about 15 percent to about C$1.1 billion ($890 million) because of C$670 million in trading losses and writedowns. Royal Bank rose 6.9 percent to C$39.

“They’re still making a billion dollars,” said Avenue’s Gardner. “Where else do you get that?”

The stock was raised to “neutral” from “sell” by Dundee Securities analyst John Aiken.

“Investors will be better served holding shares of banks that have announced versus the unknown,” The Toronto-based analyst wrote in a note to clients today.

Royal Bank was the third Canadian lender to announce writedowns and partial results before scheduled earnings reports. Toronto-Dominion Bank last week reported profit that missed analysts’ estimates after incurring a C$350 million trading loss. Bank of Nova Scotia said it had a C$890 million pretax writedown tied to trading and eroding investments.

Toronto-Dominion added 3.9 percent to C$42.90 today after dropping 23 percent last week. Scotiabank climbed 3.8 percent to C$32.44. National Bank of Canada, the nation’s sixth-largest lender, rose 13 percent, the most since 2000, to C$39.18.

Thomson Reuters Corp. rose 11 percent to C$28.75, its biggest gain in eight years. The provider of financial and legal data was raised to “outperform” from “sector perform” by Drew McReynolds at RBC Capital in Toronto. A selloff since September reflects an overly pessimistic view of the prospects of Thomson Reuters’ markets unit, the analyst wrote in a note.

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