Hopes for debt crisis fix, strong U.S. retail showing to push stocks higher

New York futures indicated big gains at the open as the Dow Jones industrial futures shot up 253 points to 11,440, the Nasdaq futures ran ahead 52 points to 2,199.5 and the S&P 500 futures were up 32.6 points to 1,186.

Futures also got a big boost from anecdotal evidence that the U.S. enjoyed a strong day for retailing at the end of last week, otherwise known as Black Friday, the start of the holiday retail season. Americans’ willingness to open their wallets has eased concerns that the world’s largest economy will slide back into recession.

But the hopes for the eurozone seemed largely based on reports and rumours.

Analysts pointed to a weekend report from Reuters that France and Germany are working on a much faster way towards Eurozone integration.

Such a plan would start off with a core zone of eight to 10 countries instead of involving all 27 EU countries.

At the same time, the International Monetary Fund denied it was readying a C600 billion rescue package for Italy.

And Germany insisted that it has no plans to float bonds together with the eurozone’s five other triple A rated nations.

The proceeds from such a measure would be used to provide assistance to some of the single currency bloc’s indebted members, such as Italy and Spain.

Investors are clearly hoping that the recent signs of deterioration in the debt crisis will finally get Europe’s leaders to agree on a package of measures that can ease market concerns over whether the euro currency itself can survive.

Worries about the debt crisis hit stock markets hard last week with the TSX dropping 3.6% and the Dow industrials tumbled 4.78%.

Markets were particularly disappointed during the week at the technical failure of a German bond auction.

And borrowing rates for Italy hit the seven per cent level for the country’s 10-year bonds last week, a level which is considered to be unsustainable.

On Monday, Italy paid sharply higher borrowing rates in an auction.

The interest rate Italy had to pay to get investors to part with their cash for 12 years skyrocketed to 7.20%, a full 2.7 percentage points higher than the last similar auction.

Meanwhile, credit rating agency Moody’s warned that the “rapid escalation” of Europe’s financial crisis is threatening the creditworthiness of all eurozone governments, even the most highly rated. Only six of the eurozone’s 17 countries have the top rating — Germany, France, Austria, the Netherlands, Luxembourg and Finland.

And the Organization for Economic Co-operation and Development said policy makers around the world must “be prepared to face the worst,” as the economic impact of Europe’s debt crisis threatens to spread around the developed world.

Commodity prices also shot higher with the January crude contract on the New York Mercantile Exchange up $2.77 to US$99.54 a barrel.

The December copper contract in New York gained nine cents to US$3.36 a pound and the December gold contract climbed $28.30 to US$1,714 an ounce.

European markets were sharply higher as London’s FTSE 100 index gained 2.26%, Frankfurt’s DAX climbed 3.57% and the Paris CAC 40 jumped four per cent.

Earlier in Asia, Japan’s Nikkei 225 index jumped 1.6%, South Korea’s Kospi gained 1.8% and Hong Kong’s Hang Seng rose 1.9%. Australia’s S&P/ASX 200 added 1.9% to 4,058.

In corporate news, Canadian uranium producer Cameco Corp. (TSX:CCO) has backed away from trying to acquire Hathor Exploration Ltd. (TSX:HAT), owner of the Roughrider deposit in Saskatchewan. Hathor is supporting a rival $654-million bid from Anglo-Australian mining giant Rio Tinto PLC (NYSE:RIO).

There’s a potential hostile takeover battle involving two of eastern Canada’s largest real-estate trusts. Cominar REIT (TSX:CUF.UN) of Quebec City is making a play to acquire Canmarc REIT (TSX:CMQ.UN), formerly known as Homburg REIT.

Cominar says it has increased its stake in Canmarc to 15.1% and is offering $15.30 cash for each Canmarc unit it doesn’t already own. The bid values Canmarc at about $838.2 million, including the stake Cominar already owns.

Paramount Resources Ltd. (TSX:POU) has reorganized its operations and plans to spin out its oilsands and bitumen businesses into a new wholly owned subsidiary, Pixar Petroleum Corp.