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Canada Stocks Gain for a Fourth Day Amid U.S. Data, EU Meeting

By Eric Lam

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Oct. 18 (Bloomberg) — Canadian stocks rose for a fourth day as investors weighed U.S. economic data and awaited news from a two-day meeting of European Union leaders in Brussels.

Encana Corp. rose 3.8 percent after an analyst with Hedgeye Risk Management said the company is next on the list of takeover targets for Exxon Mobil Corp. Lake Shore Gold Corp. and Premier Gold Mines Ltd. slipped at least 4.2 percent as the price of the metal declined for the first time in three days.

The Standard & Poor’s/TSX Composite Index added 4.87 points, or less than 0.1 percent, to 12,466.12 in Toronto. The benchmark equity gauge is up 2.2 percent this week, on pace for its biggest weekly gain in more than a month.

“The past few months markets have been moving higher, but at low volumes so there hasn’t been much conviction,” said Rob Edel, chief investment officer with Nicola Wealth Management, in a phone interview from Vancouver. His firm manages about C$1.8 billion ($1.8 billion). “They’ve removed some of the tail risk on Europe, but what they are doing will take years. It’s like herding cats, so it can be hard to be super optimistic.”

More Americans than forecast filed applications for unemployment benefits last week, reflecting an unwinding of adjustments for seasonal swings at the start of a quarter. An index of U.S. leading economic indicators rose in September by the most in seven months, while manufacturing in the Philadelphia region expanded in October for the first time in six months.

EU Summit
As leaders gather in Brussels for a two-day summit, French President Francois Hollande said efforts to stem the turmoil that began in 2009 could unravel if the EU fails to deliver on its promises. Divisions have flared over the scope of the European Central Bank’s supervisory powers and how losses would be shared.

Financial stocks contributed most to gains on the S&P/TSX as five of 10 industries rose on trading volumes 2.3 percent above the 30-day average. Gold stocks paced declines on the index.

Fiera Capital Corp., the best-performing wealth manager among its North American peers this year, jumped 6.6 percent to C$8.10, its biggest gain since February.

The firm is looking for acquisitions of companies with assets of up to C$2 billion, President Sylvain Brosseau said in an interview with Bloomberg earlier this week.

Encana surged 3.8 percent to C$23.64, its highest close in more than a year. Kevin Kaiser with Hedgeye said in an interview with Bloomberg the chances of Exxon Mobil buying the company are “now very real” after the U.S. energy firm, the largest in the world, agreed to buy Celtic Exploration Ltd. in a $2.92 billion deal yesterday.

Potential Deal
The potential deal for Encana is likely well in the $30-a-share range, with even a $34 a share offer a “steal” for Exxon, Kaiser said.

Lake Shore Gold slumped 5.9 percent to 80 Canadian cents and Premier Gold Mines retreated 4.2 percent to C$5.44 as gold for December delivery slid 0.5 percent to settle at $1,744.70 an ounce in New York. Barrick Gold Corp., the world’s largest gold producer, slipped 1.9 percent to C$38.37 and Goldcorp Inc. fell 2.6 percent to C$42.20.

Silvercorp Metals Inc. retreated 2 percent to C$5.87 and Silver Wheaton Corp. declined 1.1 percent to C$38.63. Silver for December delivery fell 1.1 percent to $32.868 an ounce.

Husky Energy
Husky Energy Inc. tumbled 2.9 percent to C$27.37 after analysts at Goldman Sachs Group Inc. cut their rating on the stock to sell from neutral.

Cenovus Energy Inc. lost 0.1 percent to C$34.53, paring earlier losses of as much as 1.3 percent. Oil for November delivery fell 2 cents to settle at $92.10 a barrel in New York, erasing an earlier loss of as much as 1.6 percent.

Astral Media Inc., the Canadian broadcaster that BCE Inc. agreed to buy for C$3 billion ($3.1 billion), slumped 3.7 percent to C$46.65. The Canadian Radio-Television Telecommunications Commission, the country’s telecommunications regulator, officially rejected BCE’s offer after the close of trading.