Ottawa Citizen

Energy producers lead TSX to seven- week high

- BY JOHN KIPPHOFF

TORONTO • Canadian stocks climbed to a seven- week high yesterday, as energy producers gained on rising oil prices and on speculatio­n of more acquisitio­ns in the industry following Royal Dutch Shell Plc’s $ 7.7 billion offer for Shell Canada Ltd.

“ Others may be taken over,” said Brian Acker, president of Acker Finley Inc. in Toronto. “ Oil companies are cheap” and there is “ a lot of value in the Canadian market.”

The Standard & Poor’s/ TSX Composite Index added 65.97, or 0.5 per cent, to 12,185.12, a level not seen since Sept. 5.

Crude oil for December delivery gained 0.9 per cent to $ 59.35 U. S. a barrel in New York as traders speculated frigid weather in the U. S. could erode heating oil inventorie­s before the winter season and as OPEC vowed to rein in production.

Shell Canada climbed for a second day, adding 13 cents to $ 42.68. The stock jumped 30 per cent Monday after Royal Dutch Shell offered $ 40 a share for the 22 per cent of Shell Canada that it doesn’t already own.

Suncor Energy Inc., the world’s largest oil- sands producer, advanced $ 1.75 to $ 86.18. EnCana Corp., Canada’s biggest natural- gas producer, rose 34 cents to $ 53.75.

“ The price of oil fell a lot last month. The fundamenta­ls of supply and demand didn’t change for the companies — ergo, oil stocks are cheap,” said Mr. Acker. “ The energy companies are also pumping out huge earnings” and “ that makes them even cheaper.”

Shares in the energy group trade at an average of 15.9 times estimated 2007 earnings. That compares with a multiple of 16.3 for the S& P/ TSX.

“ We believe this transactio­n could be the kick off to widespread consolidat­ion in the Canadian oils as majors seek to position themselves with large, low- risk resources,” UBS Securities analyst Andrew Potter wrote in a note.

A measure of energy producers added 1.3 per cent and contribute­d the most to the market’s advance.

Canadian Pacific Railway Ltd. gained $ 1.72 to $ 62.74. The country’s second- largest railroad said thirdquart­er net income fell to $ 1.02 a share from $ 1.27. That exceeded the 99- cent average analyst estimate compiled by Thomson Financial.

Bombardier Inc., the world’s thirdbigge­st maker of commercial aircraft, rose 27 cents to $ 4.12. The company announced plans to cut about 1,330 jobs and reduce regional- jet production after failing to sign up enough customers.

An index of industrial climbed 1.2 per cent.

Research In Motion Ltd. added $ 4.02 to $ 131.81. The maker of the BlackBerry e- mail phone sent a gauge of computer- related shares to a 2.3 per cent gain, the best performanc­e among 10 industry groups in the S& P/ TSX.

Financial shares declined 0.1 per cent as a group before today’s interestra­te announceme­nt from the U. S. Federal Reserve.

Toronto- Dominion Bank, Canada’s second- largest lender by assets, declined 29 cents to $ 63.89 after earnings at its U. S. online brokerage unit trailed analysts’ estimates.

In the three months ended Sept. 29, TD Ameritrade Holding Corp., the third- largest online broker, said excluding investment gains and losses, it earned 20 cents a share last quarter. That’s below the 22- cent average analyst estimate compiled by Thomson. Toronto- Dominion said in a statement that TD Ameritrade will contribute about $ 53 million to its fourth- quarter earnings.

Royal Bank of Canada, the nation’s biggest, retreated 27 cents to $ 49.73. Manulife Financial Corp., the country’s largest insurer, was down 28 cents at $ 36.40.

Fed officials yesterday began a twoday meeting, at the end of which they will leave their target interest- rate for overnight loans between banks at 5.25 per cent, according to all 106 economists surveyed by Bloomberg News. In the past month, policy makers have said inflation remains a threat, leading investors to pare bets on a rate cut next quarter.

U. S. stocks rose, sending the Dow Jones Industrial Average to its eighth record in two weeks, as higher oil prices lifted energy producers and anticipati­on of a profit at General Motors Corp. buoyed the automaker’s shares.

The Dow industrial­s rose 10.97, or 0.1 per cent, to 12,127.88, led by GM, which reports earnings today. The S& P 500 added 0.36 to 1,377.38.

The Nasdaq Composite Index, which gets two- fifths of its value from computer- related companies, slid 10.72, or 0.5 per cent, to 2,344.84. Technology stocks fell after sales at Texas Instrument­s Inc., the world’s largest maker of mobile- phone processors, failed to meet analysts’ projection­s.

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