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Canada base metal stocks rise in step with nickel
TORONTO (Reuters) - Shares of Canadian base metal companies jumped Friday in step with a sharp rise in the price of
nickel and an improved outlook for blue-chip mining stocks.
The Toronto Stock Exchange's metals and minerals stocks gained an average 6.6 percent in heavy midday trading, which
helped to fuel healthy overall gains on the Canadian exchange.
The benchmark TSE 300 index was up 75.31 points to 6877.50 in midday trade, compared with New York's Dow Jones
Industrial Average, which gained 58.45 points to 9596.21.
Base metals stocks were pummeled last year by the financial crisis in key Asian markets and the subsequent collapse of
nickel and copper prices.
But nickel made healthy gains on the London Metal Exchange Friday, stoking industry hopes of a sustained rally throughout
base metals markets.
Nickel rose $0.15 a pound to trade at $1.96 on the LME as markets continued to react gleefully to news of a major
production cutback in Australia.
Western Australian producer WMC Ltd. announced earlier this week that it would close its Kalgoorlie nickel smelter for
re-lining for 70 days and cut 15,000 tonnes of production.
Copper made smaller gains Friday, rising to $0.65 a pound from Thursday's close of $0.64 a pound.
The outlook for base metals was also boosted by higher fourth-quarter earnings for U.S.-based Alcoa , the world's largest
aluminum producer. The aluminum giant also moved to raise its quarterly dividend by 50 percent, split its stock and buy
back 10 million shares.
The higher nickel price, combined with the good earnings from Alcoa, has Canadian base metals stocks "popping," said
Manford Mallory, analyst with Research Capital Corp. in Toronto.
Mallory also said mining stocks were finally brushing aside the negative sentiment that prevailed in December when
tax-loss selling and portfolio realignments depressed the sector.
Canadian nickel producers Inco Ltd. and Falconbridge Ltd. were among the big beneficiaries of the improved outlook for
base metals.
Toronto-based Inco, the Western world's largest nickel producer, gained C$1.85 to C$19.15 a share, or 10.7 percent, in
heavy trading, while cross-town rival Falconbridge jumped C$1.45 to C$19.15 a share, or 7.6 percent.
Canada's mining and minerals index has gained about 38 percent since August 31, but it remains 42 percent lower than its
1997 high.
($1-$1.51 Canadian) |
