Canadian Stocks Rise as U.S. Lawmakers Agree to Debt-Limit Deal

Canadian stocks rose a second day, extending a two-year high, as energy and bank shares rallied while U.S. Senate leaders reached an agreement to end the nation's budget impasse and prevent a default on its debt.

Bankers Petroleum Ltd. and Legacy Oil & Gas Inc. climbed at least 4.1 percent as the price of crude advanced. Gran Tierra Energy Inc. (GTE) added 4.7 percent after boosting its 2013 production forecasts. Bank of Montreal added 0.6 percent after naming a chief operating officer. Argonaut Gold Inc. dropped 6.5 percent to pace losses among metals miners. SNC-Lavalin Group Inc. sank 4.5 percent after cutting its earnings forecast for the year.

The Standard & Poor's/TSX Composite Index (SPTSX) rose 25.75 points, or 0.2 percent, to 12,957.21 at 4 p.m. in Toronto. The benchmark Canadian equity gauge rallied to the highest close since July 2011 yesterday and is up 4.2 percent in 2013.

"If you're given the choice of being executed today or you can postpone it and talk about it some more three months down the road, you're going to take the deal," said Michael O'Brien, fund manager with TD Asset Management Inc. in Toronto. He helps manage C$216 billion ($208 billion). "For now, a lot of people are sitting on their hands. At least in the short term, once we do get a deal we will see a lift in the markets. At this point, any deal is a good deal and a sigh of relief."

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The bipartisan leaders of the Senate reached an agreement to end the fiscal impasse and to increase U.S. borrowing authority, and the Senate and House could vote on it as soon as today. The White House press secretary said President Barack Obama supports the deal.

Senate Deal

The agreement also would end the 16-day-old government shutdown and allow the U.S. to continue borrowing, a day before its authority lapses. House Republicans today signaled that they will let it pass largely with Democratic votes.

"We fought the good fight," House Speaker John Boehner, a Republican, said on WLW, a radio station in his home state of Ohio. "We just didn't win."

Nine of 10 industries in the S&P/TSX gained, with raw-materials stocks the only group to decline. Trading volume was 19 percent lower than the 30-day average.

Legacy Oil & Gas gained 4.5 percent to C$6.95 and Bankers Petroleum rose 4.1 percent to C$4.10 as energy producers advanced 0.6 percent as a group, closing at an 18-month high.

Crude for November delivery settled 1.1 percent higher in New York, reversing an earlier decline amid optimism for an end to the impasse in Washington.

Gran Tierra Energy added 4.7 percent to C$7.84 after the company increased its production forecast for the year to 21,500 to 22,500 barrels of oil equivalent a day, from 21,000 to 22,000 barrels.

Bank Stocks

Bank of Montreal, Canada's fourth-largest lender, rose 0.6 percent to C$70.66. The stock has gained in four straight sessions and closed the highest since June 2007.

The bank named Frank Techar, formerly chief executive officer of personal and commercial banking in Canada, to the new role of chief operating officer as part of a plan to consolidate oversight of its retail businesses.

Royal Bank of Canada, the nation's largest lender, increased 0.3 percent to C$68.40 and Toronto-Dominion Bank gained 0.3 percent to C$92.55.

Ivanhoe Mines Ltd. jumped 6.1 percent to C$2.26 after intersecting an "unprecedented" mineralization of platinum, palladium, rhodium and gold at a discovery in South Africa.

SNC Lavalin tumbled 4.5 percent, the most since August, to C$42.13. Canada's largest engineering company cut its annual profit forecast for the second time amid costs related to projects in North Africa.

Materials stocks fell 1.2 percent as a group. Argonaut Gold fell 6.5 percent to C$5.31 and Alamos Gold Inc. lost 4.1 percent to C$14.64.