Canadian stocks gained the most in a week, led by banks, after Canadian Imperial Bank of Commerce posted lower-than-estimated writedowns, stoking speculation that the worst of the credit crisis may soon be over for lenders.
CIBC jumped the most since July 17, lifting an index of banks and insurance stocks from a six-week low. Canadian Natural Resources Ltd. and Potash Corp. of Saskatchewan Inc. paced gains among commodity producers, as oil, metals and grain prices rose and the U.S. reported an increase in durable-goods orders.
The Standard & Poor's/TSX Composite Index jumped 1.7 percent to 13,530.65 in Toronto. Canada's equity benchmark, which derives three-quarters of its value from financial, energy and materials and stocks, has still dropped 10 percent from its June peak as commodities slumped on concern credit losses would slow global growth and demand for resources.
``This might not be the bottom yet for'' CIBC, said Michael Sprung, president of Sprung & Co. Investment Counsel, which manages about $50 million in Toronto. ``But it's certainly close enough. We're beginning to see some attractive valuations.''
Canadian Imperial rose 5.3 percent to C$60.10. The country's fifth-largest bank had C$885 million in pretax writedowns linked to the U.S. mortgage market, adding to the C$6.66 billion in debt-related costs it's reported since the third quarter of 2007.
Canadian Imperial said third-quarter profit fell 91 percent to C$71 million ($68 million) on the writedowns. CIBC earned C$1.65 a share before some one-time items, said National Bank Financial analyst Robert Sedran, missing his C$1.72 estimate.
Upgrade -CIBC was raised to ``neutral'' from ``sell'' by John Aiken at Dundee Securities Corp. in Toronto, who said that its writedowns were ``well below'' his estimate of as much as C$1.9 billion. This should allay concern that the company may have to raise capital by selling additional shares or cutting the dividend, the analyst wrote in a note. He kept his share-price target of C$49 under review.
Bank of Montreal, whose profit yesterday also missed analysts' estimates, on rising provisions for bad loans, climbed 3.7 percent to C$45.56 in Toronto. Bank of Nova Scotia increased 2.3 percent to C$47.50. National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank rose 3.5 percent, 2.5 percent and 1.8 percent, respectively. The three lenders are scheduled to report their results tomorrow.
A measure of financial shares rose 2.3 percent, leading nine of 10 industry groups in the S&P/TSX higher.
Energy Rally -Canadian Natural, whose oil-sands project is scheduled to begin production this year, rose 3.2 percent to C$90.36. Suncor Energy Inc., the world's second-largest producer of oil from the tar sands, advanced 1.8 percent to C$60.24. Gauges of energy and materials shares each rose more than 1.8 percent.
Potash Corp., the largest maker of crop nutrients, gained 1.4 percent to C$190.34. Barrick Gold Corp., the biggest bullion producer, rose 2.8 percent to C$37.02.
Oil and gas rose in New York on speculation Tropical Storm Gustav will become the most damaging hurricane since Katrina, as it moves toward production platforms in the Gulf of Mexico.
Copper, gold and soybeans prices advanced after a slip in the U.S. dollar and rising energy prices enhanced the appeal of commodities as an investment and inflation hedge.
U.S. orders for goods meant to last several years unexpectedly increased in July, gaining 1.3 percent, the Commerce Department said. The increase indicates growing foreign demand is helping companies weather a slump in domestic consumer spending.