TSX heads for sharply higher open following deal on European debt crisis

European leaders agreed early Thursday on a plan to provide Greece with more rescue loans to help relieve its crushing debt obligations. It will involve private investors taking bigger losses on the value of their Greek bonds, which would make Greece the first nation that uses the euro currency to be rated in default on its debt.

The deal requires banks to take on 50% losses on Greeks bonds. Eurozone countries and the International Monetary Fund will also provide an additional €100 billion in rescue loans as a second bailout package for Greece.

The continent’s banks will be strengthened, partially so they could sustain deeper losses on Greek bonds.

The deal also calls for a reinforcement of a European bailout fund so it can serve as a €1 trillion firewall to prevent larger economies like Italy and Spain from being dragged into the crisis.

U.S. futures signalled a sharply higher open with the Dow Jones industrial futures up 226 points to 12,028, the Nasdaq futures gained 53.5 points to 2,380 while the S&P 500 futures jumped 28.5 points to 1,265.9.

European markets also racked up big gains as London’s FTSE 100 bounded up 2.9%, Frankfurt’s DAX ran ahead 4.74% while the Paris CAC 40 gained 5.52%.

Markets have been depressed for weeks that a worsening debt crisis would see Greece default on its debt, putting extreme pressure on banks in the region which hold the country’s bonds, while also threatening a fragile global economic recovery.

The resource-heavy TSX was also set to benefit from commodity prices which moved up smartly on expectations for higher demand.

The December crude contract on the New York Mercantile Exchange gained $2.57 to US$92.77 a barrel.

Metal prices also surged with the December copper contract in New York up 15 cents to US$3.64 a pound.

Bullion prices headed lower with the December gold contract down $4.50 to US$1,728 an ounce.

Now that the Europeans have arrived at a debt crisis resolution markets can live with, investors turned their sights to a heavy corporate earnings roster.

Potash Corp. of Saskatchewan Inc. (TSX:POT) more than doubled its profits in the latest quarter to US$826 million or 94 cents a share on higher production and record sales.

Barrick Gold Corp.’s (TSX:ABX) quarterly profits rose 45% to a record US$1.37 billion in the third quarter, helped by the strength of gold prices in the period. The Toronto-based company, which reports in U.S. dollars, says the results were equal to $1.37 per share, coming in above analyst expectations of $1.34 per share, according to Thomson Reuters.

Teck Resources Ltd. (TSX: TCK.B) reports an adjusted third quarter profit of $742 million, or $1.26 per share, up sharply from $452 million, or 77-cents per share, a year ago. Record revenue of $3.4 billion in the third quarter was up 40% from $2.4 billion in the same period a year ago. Teck also announced a 33% increase in its semi-annual dividend payout to 40 cents a share.

Domtar Corp. (TSX:UFS) reported third-quarter net earnings of US$117 million or $2.95 per share, compared with net earnings of US$191 million a year ago. Sales revenue for the three months ended Sept. 30 totalled $1.42 billion, down from $1.47 billion in the prior-year period.

Shares in Asia posted solid gains earlier in the day. Japan’s Nikkei 225 index rose two per cent, South Korea’s Kospi added 1.5%, Hong Kong’s Hang Seng gained 3.3% and Australia’s S&P/ASX 200 jumped 2.5% after trading resumed following a four-hour technical glitch.