Canada Stocks Rise as Oil Producers Offset Drop in Phone Shares

Canadian stocks rose, with the benchmark gauge poised for the best quarterly performance in a year, as gains in consumer-staples companies and oil producers offset a decline in phone shares amid concern that a U.S. budget impasse may shut down the government.

Trilogy Energy Corp. soared 11 percent after providing an update on its operations in Alberta. Telus Corp. and Rogers Communications Inc. (RCI/B) slipped at least 1 percent after an analyst with Canadian Imperial Bank of Commerce lowered his price targets for the nation's largest wireless carriers due to regulatory risks. BlackBerry (BB) Ltd. increased 0.7 percent to snap three days of losses after reporting second-quarter earnings.

The Standard & Poor's/TSX Composite Index (SPTSX) rose 2.46 points, or less than 0.1 percent, to 12,844.08 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has jumped 5.9 percent this quarter, the biggest gain since September 2012, and is up 3.3 percent in 2013.

"There's a lot of anxiety going into the weekend," said Andrew Pyle, fund manager with ScotiaMcLeod Inc. in Peterborough, Ontario. He manages about C$210 million ($204 million). "Nobody should be naive out there, to think if we get a worst-case scenario with respect to the U.S. budget impasse that Canada comes out of this unscathed. You could see some very heavy losses in the TSX."

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The U.S. Senate voted to finance the government through Nov. 15, sending the bill to the House and setting up a weekend of negotiations and brinkmanship three days before federal spending authority runs out and a few weeks until the country reaches its borrowing limit.

Destabilizing Effect

President Barack Obama said in a televised statement that Congress's failure to approve funding would have a destabilizing effect on the economy. Democrats and Republicans can't agree on the inclusion of funds for Obama's health-care law in the bill.

Energy stocks added 0.1 percent as a group, as six of 10 industries in the S&P/TSX rose. Trading volume was 20 percent below the 30-day average.

Trilogy Energy soared 11 percent to C$28.80 after reporting an operating update for its Montney and Duvernay oil projects. The company said unexpected plant outages reduced third-quarter volumes to about 31,000 barrels of oil equivalent per day, and anticipates levels returning to normal in the fourth quarter.

Athabasca Oil Corp. (ATH), which is seeking a joint-venture partner for its Duvernay holdings, jumped 9.3 percent to C$7.97, the most in seven weeks.

BlackBerry Earnings

BlackBerry added 0.7 percent to C$8.28, the first increase in six days. The smartphone maker reported more complete second-quarter earnings, including a loss of 47 cents a share from continuing operations and a 45 percent plunge in sales to $1.57 billion, after disclosing preliminary results on Sept. 20.

"The slight upside likely reflects that there was nothing hidden in the results," said Bill Kreher, an analyst with Edward Jones & Co., in a phone interview from St. Louis.

Jean Coutu Group Inc. rose 1.8 percent to C$18.29 to pace gains among consumer-staples companies.

Telus dropped 1.2 percent to C$34.52 and Rogers retreated 1 percent to C$44.64. Analyst Robert Bek with CIBC World Markets cut his price targets for the two wireless carriers by 11 percent and 17 percent, respectively, due to the Canadian government's increasing attention to the space.

Canada's largest carriers signaled on Sept. 23 their intent to bid in a wireless spectrum auction in January, with no sign of interest from major foreign companies after Verizon Communications Inc. said earlier this month it wouldn't enter the Canadian market.

'Emerging Trend'

Teck Resources Ltd., Canada's largest diversified miner, dropped 4.1 percent to C$28.10 following two days of gains. Paretosh Misra, analyst with Morgan Stanley, said the company may move ahead with an oil sands project, as investing in energy assets is an "emerging trend" among miners.

Martinrea International Inc. (MRE), a metal auto-parts maker, slumped 10 percent to C$10.96 after the company said it received a press release discussing a claim from Nat Rea, former vice chairman of the company. Martinrea has not received the claim or reviewed the allegations and will "respond appropriately in due course."

Rea, who was fired in June 2012, said he filed a statement of claim alleging breaches of fiduciary duties related to several deals involving suppliers and customers and is calling for a new board of directors. The claims have not been proven in court.