Canadian Stocks Rise, Post Only 2009 Gain Among Biggest Markets

Feb. 6 (Bloomberg) -- Canadian stocks rose, making it only equity market among the 10 biggest developed nations to post a 2009 gain, on speculation rising U.S. unemployment will spur approval of a stimulus plan that revives demand for commodities.

Potash Corp. of Saskatchewan Inc. advanced 4.4 percent as grain and oilseed prices climbed on droughts in Brazil and China, suggesting farmers may step up fertilizer purchases for the next crop season. Research In Motion Ltd. rallied 3.1 percent to a four-month high after UBS AG said its analysis found “positive momentum” for sales at the maker of the BlackBerry smartphone.

The Standard & Poor’s/TSX Composite Index rose 1.7 percent to 9,008.02. U.S. stocks climbed today on speculation that a government report showing the highest unemployment rate since 1992 will force Congress to approve President Barack Obama’s $900 billion economic stimulus package.

“It’s all about the U.S. here in Canada,” said Luc Girard, who helps oversee about $14.1 billion as director of Desjardins Securities’ portfolio advisory group in Montreal. “We knew unemployment would get worse before it gets better.”

The Senate may vote this evening on an economic stimulus package after making progress in bipartisan negotiations on cutting Obama’s $900 billion plan, according to a top Democrat. The U.S. unemployment rate rose to 7.6 percent, the Labor Department said today.

Canada, which sends more than three-quarters of its exports to the U.S., lost a record number of jobs in January, pushing the unemployment rate to a four-year high of 7.2 percent. Canadian Finance Minister Jim Flaherty last month announced C$84.9 billion in deficits over the next five years as the government tries to stimulate growth with tax cuts and spending. Today he said Canada “will do more” if necessary.

‘Clean, Green’

Potash, the largest maker of crop nutrients, jumped C$4.70 to C$110.80, the highest closing price since Oct. 14. Soybean, corn and wheat prices rose in Chicago after drought hurt the outlook for crops in Brazil, and China said its wheat harvest has been cut by a lack of rain.

Potash is also in UBS AG’s so-called “Clean, Green Obama Energy Basket” of stocks that stand to benefit from the U.S. stimulus plan, according to a note today from UBS strategists Thomas Doerflinger and David Bianco.

Metal miners gained after copper rose 8.6 percent in New York, the most in three months. China, the biggest copper user, began investing the second allocation of funds from its $585 billion stimulus plan, Xinhua News Agency said Feb. 3.

Teck Cominco Ltd., Canada’s biggest diversified mining company, advanced 5.8 percent to C$5.29. Inmet Mining Corp., another copper producer, jumped 11 percent to C$26.11.

Mobile Phones

Research In Motion climbed 3.1 percent to C$72.10, the highest price since Sept. 26. UBS analysts led by Jeffrey Fan raised their share-price estimate 36 percent to $57 (C$72.01). They kept a “neutral” rating on the stock, citing concern the weaker economy may hurt demand for mobile phones.

RIM also had its share price estimate increased 18 percent to $67 by Bank of America Corp. analyst Vivek Arya in New York, who said new handsets will help the company gain market share from competitors. Arya reiterated his “buy” recommendation.

In the S&P/TSX, three stocks rose for each one that fell and eight of 10 industry groups gained. The main benchmark for Canadian stocks rallied 3.6 percent since Jan. 30, notching its second-straight weekly gain. The S&P/TSX plunged 35 percent in 2008 for its worst annual drop since 1931.

Manulife, Suncor

Manulife Financial Corp. paced gains among banks and insurers after today’s worldwide rally in equities allayed concern about investment losses at financial institutions.

Manulife, Canada’s biggest insurance company, gained 4 percent to C$21.23. Canadian Imperial Bank of Commerce, the nation’s fifth-largest lender, climbed 3.3 percent to C$48.45.

Suncor Energy Inc., the world’s second-largest oilsands producer, advanced 3.4 percent to C$25.49.

Shoppers Drug Mart Corp. fell 2.6 percent to C$43 for its biggest drop in more than two weeks. Canada’s biggest pharmacy chain had its earnings estimates cut by David Hartley at BMO Capital Markets. The recession will hurt all retailers, the Toronto-based analyst said in a note to clients today. He cut his share-price target by 7.7 percent to C$48.