Canadian stocks rose, as crude oil prices climbed and Xstrata Plc offered $4 billion in cash for LionOre Mining International Ltd., raising speculation there will be more takeovers among metals companies.
Gains in the Standard & Poor's/TSX Composite Index were limited after a report showed new-home sales in the U.S. unexpectedly fell in February to the lowest since June 2000, casting a shadow over growth prospects in the largest economy.
"Oil's up. The miners have a lot of cash on their balance sheets and are aggressive and optimistic,'' said Jackee Pratt, who helps manage $712 million at Mavrix Fund Management Inc. in Toronto. ``The large companies are looking for new assets. The economy is still growing, although the housing slowdown is pulling it down.''
The S&P/TSX rose 16.98, or 0.1 percent, to 13,254.64 as of 12:04 9.m. in Toronto.
Crude oil for May delivery climbed as much as $1.02 to $63.30 a barrel in New York, the highest since Dec. 20, after Iran took 15 British servicemen captive and the United Nations imposed new sanctions on the country, heightening concern supplies from the Middle East will be disrupted. Oil was at $62.95, up 67 cents, or 1.1 percent, in 11:43 a.m. trading.
EnCana Corp., Canada's biggest natural-gas company, rose 76 cents to C$58.76. Suncor Energy Inc., the second-largest oil-sands producer, added 40 cents to C$85.15. Husky Energy Inc., the oil company controlled by Hongkong billionaire Li Ka-shing, gained C$1.38 to C$79.60.
Energy Stocks
A measure of energy shares accounting for more than a quarter of the S&P/TSX's value, paced gains in the market last week as oil prices advanced. Today it added 0.4 percent.
Shares of Lionore rose C$1.58, or 9 percent, to C$19.07. Xstrata, the world's fourth-largest nickel producer, agreed to buy LionOre for $4 billion in cash, increasing nickel production by 36 percent. Zug, Switzerland-based Xstrata will pay C$18.50 a share for LionOre, it said today in a statement, 5.8 percent more than the company's closing share price in Toronto on March 23.
Labor shortages and cost increases have delayed new projects for companies including Cia. Vale do Rio and BHP Billiton Ltd., leaving stockpiles monitored by the London Metal Exchange down 31 percent this year. Nickel for delivery in three months climbed 0.8 percent to $42,550 a metric ton in London. The metal traded at a record $48,500 on March 16.
``I wouldn't be surprised if there is a counter bid,'' said Gerry Brockelsby, who holds Lionore shares among the $266 million that he manages at Marquest Investment Counsel in Toronto. ``With nickel prices where they are, the deal highlights the compelling cash flows and values in these companies. You can overlay that on copper and the other metals.''
First Quantum
Other metals producers also gained. First Quantum Minerals Ltd. a miner of copper in Africa, climbed C$1.89 to C$75.39. Teck Cominco Ltd., the world's second-biggest zinc producer, added C$1.82 to C$81.82.
An index of raw-materials shares rose 0.3 percent.
A five-year rally in metals such as nickel, used to make stainless steel, spurred more than $123 billion of acquisitions last year in the mining industry, up from about $60 billion in 2005, according to Bloomberg data.
New-home purchases declined 3.9 percent to an annual pace of 848,000 last month from a revised 882,000 rate in January, the Commerce Department said today in Washington. The report dimmed prospects of a quick recovery in housing in the U.S., Canada's most important trading partner.
``The new-home sales report is an indication of a slower economy -- it'll affect economically sensitive stocks,'' said Pratt.
Industrials
SNC-Lavalin Group Inc. fell 95 cents, or 2.6 percent, to C$33.93 and led an index of industrial shares lower. Canada's biggest engineering and construction company said a loss on a power project will hurt first-quarter earnings. The bankruptcy of a key supplier is causing the loss on the project, the Montreal-based company said in a statement sent today by CNW Telbec. The company's power segment is now projected to post an operating loss in 2007.
Industrial stocks, among the most closely tied to economic growth, declined 0.3 percent as a group.
Nortel Networks Corp. fell 32 cents to C$27.68. North America's biggest phone-gear maker weighed on an index of computer- related shares, which slipped 0.6 percent.
The following shares were having unusual price changes.
Connacher Oil & Gas Ltd. (CLL CN) rose 12 cents, or 3.2 percent, to C$3.92. The oil and natural gas exploration company said on March 23 that net income for 2006 rose to 4 cents a share from 1 cent.
Menu Foods Income Fund (MEW-U CN) dropped 70 cents, or 14 percent, to C$4.40. The company, which recalled 60 million cans of wet pet food in the U.S. last week, asked for all brands involved to be removed, regardless of the date of manufacture, amid concern tainted products are still being sold. At least 16 cats and dogs have died from eating the contaminated food, the U.S. Food and Drug Administration has said.
Last week the chief executive officer of the pet food maker said the company will take responsibility for pet owners' expenses. The U.S. Food and Drug Administration said it has had as many as 4,400 phone calls about sick pets. The share shave lost 40 percent since March 15, the day before the recall.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Your Ads At Here
