Canadian Stocks Rally, Led by RIM, Manulife; TransCanada Drops

By John Kipphoff

Nov. 18 (Bloomberg) -- Canadian stocks rose for the first time in three days, led by Research In Motion Ltd., as better- than-estimated results from Hewlett-Packard Co. signaled that some technology company earnings may withstand a recession.

Research In Motion had the steepest gain in almost two months, helped by anticipation of a new BlackBerry phone being introduced this week. Manulife Financial Corp. rallied from near a four-year low, leading finance shares higher. Pipeline company TransCanada Corp. fell on plans to sell additional stock and a decline in oil prices.

The Standard & Poor's/TSX Composite Index gained 0.5 percent to 8,835.76 in Toronto, rallying from a three-week low. Canada's main stock benchmark alternated between gains and losses as oil rallied before erasing gains. Almost two stocks fell for every one that rose.

``The big news today is RIM's move,'' said Duncan Stewart of Duncan Stewart Asset Management in Toronto. ``RIM's gotten pounded lately. It may be a snap-back rally. RIM looks like it may have hit a bottom.''

The broader market may not be at a bottom yet, he said, because oil prices may fall further. The S&P/TSX, which gets almost three-quarters of its value from energy, mining and finance shares, fell 42 percent before today from a June peak as commodities slid and global credit losses mounted.

Hewlett-Packard posted a fourth-quarter profit before one- time items of $1.03 a share, beating the $1 average of analyst estimates compiled by Bloomberg. Sales rose 19 percent to $33.6 billion, also exceeding projections. The shares gained 14 percent in New York.

`Unrealistically Dour'

Research In Motion jumped 12 percent to C$58, the steepest gain since Sept. 19. The stock has the most compelling valuation in six years and sentiment on it is ``unrealistically dour,'' Scotia Capital's Toronto-based analyst Gus Papageorgiou said in a note to clients.

A successful launch of its Storm handset in the U.S. on Nov. 21 will remove the largest risk hanging over the stock, Papageorgiou said, reiterating his ``sector outperform'' rating and a share target of C$160. The stock is trading almost two- thirds below its June 19 peak on concern the company's profit growth will be hurt by a recession and competition from Apple Inc.'s iPhone, and increased marketing spending on new handsets.

Manulife, Canada's biggest insurance company, climbed 6.2 percent to C$22.36, the most in two weeks. The stock fell 13 percent this month before today after sliding 37 percent in October, on concern that the company may have to raise fresh capital to cover losses from the global equity market slump.

Banks Gain

Bank of Nova Scotia, the nation's third-largest lender, added 3 percent to C$37.17. Toronto-Dominion Bank, the second- biggest, added 0.8 percent to C$52.18.

BCE Inc., Canada's biggest phone company, rose 2.8 percent to C$38.35, a nine-week high, on optimism its C$51.7 billion ($42 billion) buyout led by Ontario Teachers' Pension Plan will proceed. The transaction is scheduled to close by Dec. 11 and banks financing the deal may have begun marketing the loans, according to a report last month from RBC Capital Markets.

A measure of finance companies, the biggest by value among the S&P/TSX's 10 industries, rose 0.7 percent. Phone shares added 2.2 percent and energy stocks fell 0.2 percent as a group.

TransCanada fell 4.9 percent to C$32.85, the lowest since Oct. 16. The owner of Canada's largest pipeline system said it will issue about 30.5 million shares at C$33 apiece to raise funds to pay off debt and finance capital projects. Additional share may dilute existing shareholders.

Enbridge Inc. dropped 4.2 percent to C$37.50, the most since Oct. 15. Canada's largest pipeline company said yesterday that it'll invest an additional $500 million in Enbridge Energy Partner LP, its U.S. unit, to raise its stake to about 27 percent from 15 percent.

Fortis Inc. dropped 5.9 percent to C$25.96. The investor in electric distribution utilities was downgraded to ``sector perform'' from ``sector outperform'' by Scotia Capital analyst Sam Kanes in Toronto, who cited the stock's recent appreciation. An index of utility stocks fell 4 percent.

EnCana Corp., the nation's largest energy company by market value, climbed 2.1 percent to C$52.59.

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