Canada Stocks Jump Most in Two Months as Resources, Banks Rally

(Bloomberg) -- Canadian stocks jumped the most in two months, as energy producers rallied with crude oil to help spur broader gains, while fresh U.S. data showed growth in the world’s largest economy remains mediocre.

The S&P/TSX Composite Index gained 1 percent to 14,503.67 at 4 p.m. in Toronto, rebounding for a second day from the lowest level since July 8. The index has advanced 3.1 percent this quarter. That’s made Canadian stocks more expensive than U.S. peers, with a price-to-earnings ratio of 23 maintaining a 14 percent premium over the S&P 500 Index.

Energy producers and financial services companies gained at least 0.8 percent to lead increases across all 10 industries in the S&P/TSX. Crude futures rose 0.8 percent in New York, rebounding after losing 5.9 percent the previous two sessions. Encana Corp. increased 3.3 percent. Royal Bank of Canada and Bank of Nova Scotia rallied at least 1.6 percent, while insurer Manulife Financial Corp. added 2.3 percent, its best in nine weeks.

Global markets are stabilizing after a sharp slide earlier this week amid fresh concern central banks are rethinking their stimulus policies even as global growth remains tepid. Reports today showed U.S. industrial production and retail sales declined more than forecast. The S&P 500 and Dow Jones Industrial Average rallied 1 percent in New York.

SNC-Lavalin Group Inc. climbed 3.2 percent, the most since May, sending industrials companies higher after analysts at CIBC World Markets raised their rating for the stock to sector outperform, the equivalent of a buy.

Raw-materials producers added 0.7 percent. The S&P/TSX Materials Index remains the top performer in Canada this year, fueling a rebound in the wider gauge after slumping the most since the 2008 financial crisis last year. Even as the rally in gold producers has stalled since August, reflecting the uncertainty around the Fed’s intentions, the group is still up 48 percent and set to halt the longest yearly losing streak since 1988. Gold is seen as an alternate store of value.

Magna International Inc. added 1.4 percent after losses in four of the prior five sessions. The manufacturer is considering a new assembly plant after winning a deal to build luxury sedans for BMW AG.

Food processor SunOpta Inc. jumped 7 percent, for the highest close since January, after activist fund Engaged Capital disclosed a new 7.5 percent stake. SunOpta is conducting a strategic review and has held talks with Engaged.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net. To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, John Shipman