Canadian stocks rose

Canadian stocks rose for a second day after Xstrata Plc offered $4 billion in cash for LionOre Mining International Ltd., raising speculation there will be more takeovers among metals companies. Energy shares, led by EnCana Corp., gained as crude oil touched a three-month high.

The Standard & Poor's/TSX Composite Index rose 65.22, or 0.5 percent, to 13,302.88 in Toronto, leaving the benchmark about 0.8 percent below its Feb. 26 closing record of 13,404.46. Gains 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.

``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 in Toronto. ``The large companies are looking for new assets. The economy is still growing, although the housing slowdown is pulling it down.''

Shares of LionOre rose C$1.80, or 10 percent, to C$19.299. Xstrata, the world's fourth-largest nickel producer, agreed to buy LionOre to increase nickel production by one-third. Xstrata said it will pay C$18.50 a share, 5.8 percent more than LionOre's closing price in Toronto on March 23.

``I wouldn't be surprised if there's a second bid,'' said Gerry Brockelsby, who holds Lionore shares among the $266 million he manages at Marquest Investment Counsel in Toronto.

Labor shortages and cost increases have delayed new projects for companies including Cia. Vale do Rio Doce and BHP Billiton Ltd., leaving stockpiles monitored by the London Metal Exchange down 31 percent this year. Nickel for delivery in three months climbed 0.7 percent to $42,500 a metric ton in London. The metal traded at a record $48,500 on March 16. Copper and gold also rose.

`Compelling'

``With nickel prices where they are, the deal highlights the compelling cash flows and values in these companies,'' said Brockelsby. ``You can overlay that on copper and the other metals. This'll start the next round of takeovers. There is a tremendous amount of upside in the market.''

Other mid-sized metals companies gained. Sherritt International Inc., which mines for nickel in Cuba, added 75 cents, or 4.7 percent, to C$16.75. HudBay Minerals Inc., a zinc producer, increased C$1.12, or 5.5 percent, to C$21.32. First Quantum Minerals Ltd. a miner of copper in Africa, climbed C$1.50 to C$75.00.

Teck Cominco Ltd., the world's second-biggest zinc producer, added C$3.23 to C$82.23. The company was raised to ``buy'' from ``hold'' by Greg Barnes at TD Newcrest. The analyst expects the shares to reach C$95 within 12 months.

Alcan Inc., the second-largest maker of aluminum, advanced C$1.15 to C$62.05.

Not all intermediate miners advanced. Centerra Gold Inc. slid C$1.53, or 12 percent, to C$10.99, the worst drop in the S&P/TSX. The company, which operates the Kumtor gold mine in Kyrgyzstan, said in a statement that the Kyrgyz parliament voted to accept a draft bill that challenges ``the legal validity of Kumtor agreements.''

An index of raw-materials shares rose 1.3 percent.

Five-Year Surge

A five-year surge 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.

Canadian energy stocks gained as crude oil for May delivery climbed as much as $1.02 to $63.30 a barrel in New York, the highest since Dec. 20. Iran on March 23 captured 15 British servicemen prompting the United Nations to impose new sanctions on the country the next day, heightening concern that supplies from the Middle East will be disrupted. Oil closed at $62.91, up 63 cents, or 1 percent.

EnCana, Canada's biggest natural-gas company, rose 92 cents to C$58.92. Suncor Energy Inc., the second-largest oil-sands producer, added 33 cents to C$85.08. Husky Energy Inc., the oil company controlled by Hongkong billionaire Li Ka-shing, gained C$1 to C$79.22.

A measure of energy shares added 0.7 percent today. Together with materials, it accounts for 43 percent of the S&P/TSX's value. Energy stocks paced gains in the market last week as oil began its five-day rally.

Housing Concerns

U.S. 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 ``report is an indication of a slower economy -- it'll affect economically sensitive stocks,'' said Pratt.

SNC-Lavalin Group Inc. fell C$1.03, or 3 percent, to C$33.82 and led an index of industrial shares lower. Canada's biggest engineering and construction company said a loss on a power project, due to the bankruptcy of a key supplier, will hurt first- quarter earnings. Industrial stocks, among the most closely tied to economic growth, declined 0.4 percent as a group.

The following shares had unusual price changes.

Angiotech Pharmaceuticals Inc. (ANP CN) fell 46 cents, or 6.6 percent, to C$6.55. The maker of a drug to coat cardiac stents sold by partner, Boston Scientific Corp., declined after study announced today at the American College of Cardiology meeting in New Orleans, found that drugs are just as good as stents in helping patients with heart disease live longer and avoid heart attacks.

Menu Foods Income Fund (MEW-U CN) dropped 80 cents, or 16 percent, to C$4.30. 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. The shares have lost 42 percent since March 15, the day before the recall.

Sino-Forest Corp. (TRE CN) gained for a sixth straight day, adding C$1.07, or 9 percent, to C$12.95. The Canadian lumber producer operating in China said on March 23 that it plans to sell 26 million shares and raise $200 million, to help purchase 200,000 hectares (494,000 acres) of timberland along China's border with Myanmar for as much as $1.4 billion. The stock has risen 28 percent since March 16.

Alcan Inc. (AL CN)
EnCana Corp. (ECA CN)
HudBay Minerals Inc. (HBM CN)
Husky Energy Inc. (HSE CN)
First Quantum Minerals Ltd. (FM CN)
LionOre Mining International Ltd. (LIM CN)
Sherritt International Inc. (S CN)
SNC-Lavalin Group Inc. (SNC CN)
Suncor Energy Inc. (SU CN)
Teck Cominco Ltd. (TCK/B CN)


source:www.bloomberg.com