Growing optimism about Greek bailout to send stock markets higher

The energy giant also reported its quarterly loss narrowed to $246 million, down from $469 million a year ago.

The Canadian dollar was ahead 0.21 of a cent to 100.56 cents US as Statistics Canada reported that higher gasoline prices led to Canada’s annual inflation rate rising two notches to 2.5% in January.

As well, underlying core inflation — which excludes volatile items such as some fresh food and gas — rose to 2.1%, one tenth of a percentage point higher than the Bank of Canada’s target.

U.S. futures were positive with the Dow Jones industrial futures up 36 points to 12,906, the Nasdaq futures up one point to 2,594.5 while the S&P 500 futures climbed 2.5 points to 1,357.3.

Optimism that Greece will clinch a €130 billion has grown amid reports that the European Central Bank will swap its holdings of an estimated €50 billion of Greek government bonds for new bonds to ensure that it doesn’t take losses in a debt restructuring. The ECB bought most of the bonds at a deep discount while attempting to hold down Greek borrowing costs and would realize a profit on the exchange.

Also, Germany appeared to abandon its effort to delay the release of the bulk of the bailout money until after Greek elections expected to take place in April.

And on Friday, France’s Finance Minister Francois Fillon told RTL radio that the Europeans must honour their commitments, now that the Greek Parliament and party leaders have met key conditions.

Earlier this week, markets had become vexed by worries that Greece could be forced into a disorderly default on a vital €14.5 billion bond repayment due next month. A deterioration in relations between Greece and its partners in the eurozone, particularly with Germany, had prompted speculation that a default may be brewing.

There are growing expectations that the bailout will be approved during a meeting of eurozone finance ministers on Monday.

Markets in Toronto and New York racked up solid, triple-digit advances Thursday on growing optimism about the Greek bailout prospects, along with better than expected economic data on jobless insurance claims and an important index on manufacturing activity in the U.S. Northeast.

Commodity prices also ran ahead with the March crude contract up 52 cents to US$102.83 a barrel.

Crude has jumped from US$96 earlier this month as a surge in stock markets suggests investor confidence in the U.S. economic outlook is improving.

Rising fears that a military conflict will erupt over Iran’s nuclear program and block oil supplies from reaching markets has also helped push crude prices higher.

However, some analysts are starting to worry that rising fuel costs will undermine consumer spending and stymie economic growth.

Metal prices also advanced as the March copper contract in New York gained a penny to US$3.80 a pound.

And April gold gained $5.20 to US$1,733.60 an ounce.

European bourses advanced with London’s FTSE 100 gained 0.47%, Frankfurt’s DAX climbed 1.28% and the Paris CAC 40 was ahead 1.34%.

Earlier in Asia, Tokyo’s benchmark Nikkei 225 index jumped 1.6%, Seoul’s Kospi rose 1.3% and Hong Kong’s Hang Seng was up one per cent.

Chinese stocks ended flat after spending the day swinging between positive and negative territory. The Shanghai Composite Index was practically unchanged.

In other corporate news, pipeline and natural gas company Enbridge Inc. (TSX:ENB) said its is raising its dividend by 15% after reporting fourth quarter net earnings grew slightly. Enbridge’s earnings were $335 million, or 44 cents per share, compared to $326 million a year ago.

Revenues grew to $5.4 billion from $4.1 billion in the fourth-quarter of 2010 as the company shipped a greater volume across its pipelines.