Canadian Stocks Climb as Suncor, Teck Gain With Commodities

By Matt Walcoff

Aug. 21 (Bloomberg) -- Canadian stocks rose for a fourth day, led by commodity producers, as economic-growth reports from Germany and France and a bigger-than-forecast jump in U.S. home sales fueled speculation the global recession is easing.

Suncor Energy Inc., Canada’s biggest energy company, gained 3.1 percent as crude oil futures reached their highest point this year. Teck Resources Ltd. advanced 1.7 percent as zinc and copper climbed. Barrick Gold Corp., the world’s largest gold producer, added 1.6 percent.

“The market’s tone is driven by improving economic data, specifically in Europe,” said Andrew McCreath, a portfolio manager at Sentry Select Capital Corp. in Toronto, which manages about C$4 billion. “The world is back to thinking that it’s synchronous growth; if one guy improves, the other guy’s going to improve.”

The Standard & Poor’s/TSX Composite Index advanced 130.67 points, or 1.2 percent, to 10,831.18. The equity benchmark has risen 21 percent this year as commodity prices rebounded on signs the global economy is recovering from the first simultaneous recessions in the U.S., Europe and Japan since World War II.

Oil climbed to a 10 month high today as the euro strengthened against the dollar after German services and French manufacturing expanded in August, bolstering the appeal of commodities to investors.

Record Increase

Sales of existing U.S. homes rose 7.2 percent to a 5.24 million annual rate, the highest since August 2007, the National Association of Realtors said in Washington. The gain was the biggest since records began in 1999.

Crude oil for October delivery increased 1.3 percent to $73.89 a barrel in New York.

Suncor gained 3.1 percent to C$35.53 to contribute the most to the S&P/TSX’s rally. Petrobank Energy and Resources Ltd. led energy companies with a 6.9 percent surge to C$40.29, its highest price since September.

The weakening U.S. dollar boosted gold prices, which tend to rise as the U.S. dollar falls. Gold futures for December delivery climbed 1.4 percent to $954.70 an ounce in New York.

Barrick added 1.6 percent to C$37.60, for a weekly gain of 0.6 percent. The second-largest gold producer, Goldcorp Inc., rose 1.2 percent to C$38.84. Kinross Gold Corp. jumped 2.5 percent to C$20.99.

Silver Producers

Silver Wheaton Corp., Pan American Silver Corp. and Silver Standard Resources Inc. each gained at least 2.8 percent as silver for September delivery increased 2.1 percent in New York.

Copper for December delivery gained 5.1 percent to $2.89 a pound in New York, while zinc, nickel and lead rose in London.

Teck Resources, Canada’s largest base-metals producer, rallied 1.7 percent to C$28.88. Equinox Minerals Ltd., which mines copper in Zambia, climbed 2.3 percent to C$2.66.

“The weaker U.S. dollar decreases the price of commodities for buyers of commodities outside the United States,” McCreath said. “There’s a belief that it has a tendency to increase demand, and as a result commodity prices go up.”

Energy and raw-materials companies make up 43 percent of the value of the TSX.

Economic Prospects

Shortly after trading began, U.S. Federal Reserve Chairman Ben S. Bernanke told a symposium that “the prospects for a return to growth in the near term appear good” both in the U.S. and internationally.

“We’ve got some good news from Germany, we’ve got some good news from France, we’ve got Bernanke saying the recession is over,” said Steven Conville, a Markham, Ontario-based portfolio manager at Blackmont Capital Inc., which manages about C$8 billion. With real-estate sales improving “from abysmal to horrible that makes for, on light volume, a positive buying day,” he said.

The S&P/TSX pared its losses for the week to 0.2 percent. The index dropped 316.42 points Aug. 17 after foreign direct investment in China fell and Japan’s economy grew less than economists estimated.

Contract manufacturer Celestica Inc. led the S&P/TSX with an 8 percent gain to C$9.60, its highest price since May 2008, after Citigroup increased its rating on the stock to “hold” from “sell.”

Only three stocks on the S&P/TSX lost more than 2 percent. New Gold Inc. plunged 5.8 percent to C$3.77, after a 5.8 percent gain from yesterday. The company said it would sell 26.7 million shares for C$3.75 apiece. New Gold had 356 million shares outstanding as of July 31.

Pharmaceutical-services company Patheon Inc. soared 31 percent to a 10-month high of C$3.38 after receiving an $460 million buyout offer from Lonza Group AG of Switzerland. Mississauga, Ontario-based Patheon isn’t on the S&P/TSX index.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net.

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Japan Stocks Drop on End of ‘Clunkers’ Program; Nintendo Falls

By Masaki Kondo

Aug. 21 (Bloomberg) -- Japanese stocks fell, capping their first weekly drop in more than a month, as U.S. plans to close a car-financing program dragged down automakers.

Honda Motor Co., a carmaker that derives almost half its sales from North America, sank 4.1 percent after the U.S. said it will close the “cash for clunkers” program on Aug. 24. Nintendo Co. tumbled to the lowest price in almost three years, coming down to the level before the release of its Wii game machine. Sumitomo Metal Mining Co., Japan’s No. 2 copper smelter, sank 3.4 percent after prices for the metal slid for a sixth day.

The Nikkei 225 Stock Average slid 1.4 percent to close at 10,238.20 in Tokyo. The broader Topix index lost 1.2 percent to 947.34, as more than three stocks slid for each one that rose.

“What matters most is whether the U.S. economy recovers and consumers come back to the car market after the clunkers program ends,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management Co., which oversees the equivalent of $14 billion. “Employment and consumer spending haven’t improved as quickly as people hoped in the U.S. We may not see a positive spiral for a while in which a recovery in demand leads to an increase in output and jobs.”

For the week, the Nikkei dropped 3.4 percent, and the Topix lost 2.7 percent, their first weekly slump since the five days ended July 10.

The Topix has rallied 35 percent from a quarter-century low on March 12. Sixteen percent of the companies in the gauge trade at more than 50 times their estimated net income for this year, three times the level of the Standard & Poor’s 500 Index in the U.S., data compiled by Bloomberg show.

End of Program

The “cash for clunkers” program offers car buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The program will close on Aug. 24, U.S. Transportation Secretary Ray LaHood said in a statement yesterday, after having recorded transactions valued at $1.9 billion in rebates.

Honda, Japan’s No. 2 carmaker, lost 4.1 percent to 2,955 yen, the steepest dive since July 8. Larger rival Toyota Motor Corp., which has the biggest share of purchases under the clunkers program, lost 2.9 percent to 3,980 yen. Automakers collectively were the biggest losers among the 33 industry groups on the Topix, followed by metal producers, and Toyota and Honda were the heaviest drags on the Topix.

The weakening dollar exacerbated declines by cutting the value of U.S. sales at Japanese companies when converted into their home currency. The dollar depreciated to as much as 93.48 per yen from 94.46 at the close of Tokyo stock trading yesterday.

Nintendo, which counts the Americas as its biggest market by sales, dived 3.2 percent to 23,690 yen in Osaka trading, the lowest close since October 2006. That’s a month before the release of its flagship Wii game machine in the U.S.

Sumitomo Metal lost 3.4 percent to 1,424 yen, while Mitsui Mining & Smelting Co. slid 4.6 percent to 269 yen. Copper retreated 0.6 percent today in its sixth consecutive decline.

Nikkei futures expiring in September fell 0.8 percent to 10,280 in Osaka and lost 0.8 percent to 10,275 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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European, U.S. Stock-Index Futures Drop; Asian Shares Decline

By Daniela Silberstein

Aug. 21 (Bloomberg) -- European and U.S. stock-index futures fell as commodities dropped and the U.S. said it would close the federal “cash for clunkers” program that helped revive auto sales. Asian shares declined amid speculation that China will tighten capital requirements and curb lending.

Royal Dutch Shell Plc and BHP Billiton Ltd. may slip in European trading after oil slid in New York and copper decreased on the London Metal Exchange. Daimler AG, which generates about 18 percent of its revenue in America, may move after the U.S. said it will stop accepting applications for the clunkers plan on Aug. 24.

Futures on the Euro Stoxx 50 Index dropped 0.2 percent at 7:20 a.m. in London. The U.K.’s FTSE 100 Index is set to open 31 points lower, according to inter-dealer broker BGC Partners.

Standard & Poor’s 500 Index futures expiring in September declined 0.4 percent before a report on sales of existing homes. The MSCI Asia Pacific Index fell 1 percent, extending its biggest weekly drop in two months, as earnings at Insurance Australia Group Ltd. and Billabong International Ltd. trailed estimates.

China plans to tighten capital requirements for banks, threatening to curb the record lending that’s fueled a 60 percent rally in the nation’s stock market, three people familiar with the matter said.

Shanghai’s Rally

The Shanghai Composite Index almost doubled during the first seven months of this year through Aug. 4, after falling 65 percent in 2008. Since reaching this year’s high on Aug. 4, it’s plummeted 15 percent. The index on Aug. 19 briefly fell 20 percent from this year’s high, the threshold for a bear market, before ending the day down 19.8 percent. The gauge fluctuated between gains and losses today.

Europe’s Stoxx 600 has rallied 45 percent since March 9 as companies from Roche Holding AG to Johnson & Johnson reported better-than-estimated results and Germany and France unexpectedly returned to economic growth.

The increase left the index valued at 40.6 times the profits of its companies, the most expensive level since 2003, weekly data compiled by Bloomberg show. The Stoxx 600 is up 0.4 percent this week, heading for its fifth advance in six weeks.

Shell and BP Plc, Europe’s largest oil producers, will probably drop. Crude fell 0.5 percent in New York after yesterday’s unexpected increase in initial U.S. jobless claims raised concern that fuel demand may slow in the world’s biggest economy.

BHP, Rio Tinto

BHP Billiton, the world’s largest mining company, lost 0.9 percent to A$36.78 in Sydney. Chief Executive Officer Marius Kloppers said global demand for metals won’t rise beyond what is required to rebuild stockpiles for the remainder of this year.

Rio Tinto Group, the third-biggest mining company, slid 2.6 percent to A$56.53. Copper fell 0.7 percent in London, extending its first weekly decline in six.

Daimler and Volkswagen AG may move. The clunkers plan, which offers auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles, has recorded more than 457,000 dealer transactions worth $1.9 billion in rebates, the Transportation Department said in a statement yesterday.

Insurance Australia, the nation’s largest insurer of cars and houses, slumped 6.6 percent to A$3.55. The company posted net income of A$181 million ($151 million) in the 12 months ended June 30. That’s lower than the A$229.7 million estimate of seven analysts compiled by Bloomberg.

Billabong, U.S. Housing

Billabong, Australia’s biggest surfwear maker, sank 5.1 percent to A$9.67. The company said net income fell 13 percent to A$152.8 million in the 12 months ended June, missing the A$158.5 million average analyst estimate.

Sales of existing U.S. homes probably climbed 2.1 percent to a 5 million annual rate in July, the highest level in 10 months, signaling the housing crisis is easing, economists said before a report today.

In another sign the worst of the U.S. recession is over, a gauge of current conditions showed the economy steadied last month. The Conference Board’s coincident index was unchanged in July after falling in 17 of the 19 months since the contraction started in December 2007, figures from the New York-based private research group showed yesterday.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

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Brocade, Intuit, Salesforce.com, Wet Seal: U.S. Equity Preview

By Lu Wang

Aug. 21 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Brocade Communications Systems Inc. (BRCD US): The largest maker of switches for data-storage networks reported third- quarter sales of $493.3 million, missing the average analyst estimate by 2.1 percent, according to Bloomberg data.

Hibbett Sports Inc. (HIBB US): The owner of sporting-goods stores reduced its full-year earnings forecast after per-share second-quarter profit trailed the average analyst estimate by 59 percent.

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