TORONTO (Bloomberg) - Canadian stocks rose a third day, the longest streak since January 6, as financial and industrial companies gained on expectations that increased government spending in Canada and the U.S. will help temper the recession.

Royal Bank of Canada advanced 3.9 percent, leading banks and insurers higher for a second day since they fell to a five-year low. Canadian Pacific Railway Ltd. added the most in three months after its earnings beat analysts' estimates. Silver Wheaton Corp. fell 7.2 percent on a plan to sell stock, pacing a drop in commodity shares as metals and oil retreated.

The Standard & Poor's/TSX Composite Index added 1.2 percent to 8,759.63 in Toronto. The main Canadian benchmark has lost 2.5 percent in 2009, extending last year's 35 percent drop. Reports yesterday showed consumer confidence in the US, Canada's biggest trade partner, fell to a record low, and home prices declined.

"Obviously there will be stimulus," said David Rea, Chairman of Davis-Rea Ltd., which manages about $450 million in Toronto. "And Ottawa will do anything it has to do to keep the banks solvent."

Canadian Finance Minister Jim Flaherty announced today after the Toronto Stock Exchange closed C$84.9 billion ($69.2 billion) in budget deficits over the next five years. Flaherty said Canada will try to stimulate growth by building more roads and bridges, and cutting personal income taxes, as well as buying an additional C$50 billion in mortgages and C$12 billion in debt backed by car leases, to encourage bank lending.

Royal Bank, the nation's biggest lender, gained C$1.16 to C$30.66, rallying for a second day after falling to the lowest since 2003. Bank of Nova Scotia, the third-largest, added 5.8 percent to C$29.60, the most in almost two months. Manulife Financial Corp., Canada's biggest insurance company, rose 6.1 percent to C$21.40. Sun Life Financial Inc., the third-largest insurer, climbed 8.1 percent to C$25.94.