Stock markets move higher as traders await plan on European debt crisis

The TSX Venture Exchange rose 13.97 points to 1,546.88 with the market also finding support from higher commodity prices amid positive economic news from China.

The Canadian dollar advanced a day before the Bank of Canada’s scheduled announcement on interest rates. The central bank is widely expected to leave its key rate unchanged at one per cent and the loonie was up 0.15 of a cent at 99.29 cents US.

Positive earnings helped push U.S. markets higher as the Dow Jones industrial index gained 43.98 points to 11,852.77.

The world’s largest construction and mining equipment maker. Caterpillar reported Monday that third-quarter net income rose to US$1.14 billion, or $1.71 a share, which beat estimates of $1.57 a share. Its shares were up more than 5.3% to US$92.03 in New York.

The Nasdaq composite index added 22.84 points to 2,660.3 while the S&P 500 futures were up 7.09 points to 1,245.34.

Even as optimism increases that European authorities are ready to move on crisis that threatens the region’s banks and a global economic recovery, there were reminders of the fragility of state of the region’s own economy.

A key survey released Monday showed that activity in the eurozone’s private sector fell more than expected in October. Momentum in both manufacturing and services continued to weaken, with the so-called purchasing managers’ index falling to 47.3 and 47.2 respectively. A figure below 50 denotes contraction.

Meanwhile, commodity prices were supported by data showing an expanding Chinese economy.

HSBC’s preliminary — or “flash” — China Manufacturing Purchasing Managers’ Index climbed to 51.1 on a 100-point scale, up from 49.9 in September.

Among key sub-components of the survey, manufacturing output rose to a six-month high of 51.7, picking up from 50.3 in September, and above the 50 level which indicates expansion.

“The data provide reassurance that China will avoid the hard landing over which some market participants have expressed concern,” said Scotia Capital currency strategist Eric Theoret.

The TSX energy sector gained 1.41% as the December crude contract on the New York Mercantile Exchange gained 65 cents to US$88.05 a barrel. Suncor Energy (TSX:SU) moved up 43 cents to $30.70 and Canadian Natural Resources (TSX:CNQ) climbed 59 cents to $34.25.

Copper prices also took off after slumping over five per cent last week, with the December copper contract in New York ahead 12 cents to US$3.34 a pound. The base metals sector climbed three per cent as Teck Resources (TSX:TCK.B) rose $1.22 to $36.02 and HudBay Minerals (TSX:HBM) gained 27 cents to $11.10.

Bullion prices advanced with the December contract up $17 to US$1,653.10 an ounce, pushing the gold sector up 1.5%. Barrick Gold Corp. (TSX:ABX) ran up $1 to $45.92 and Goldcorp Inc. (TSX:G) improved by 84 cents to $45.84.

The information technology sector was also supportive, up 1.6% with Research In Motion Ltd. (TSX:RIM) ahead 29 cents to $23.29.

In Asia, Japan’s Nikkei 225 index added 1.9% after the government said exports grew for a second straight month in September. The country’s trade suffered a five-month decline in the wake of the March 11 earthquake and tsunami that devastated northeast Japan.

Mainland Chinese shares rose in the wake of the HSBC report.

European bourses were positive with London’s FTSE 100 index up 0.41%, Frankfurt’s DAX gained 0.14% while the Paris CAC 40 was up 0.06%.

In other corporate news, ATS Automation Tooling Systems Inc. (TSX:ATA) shares fell 58 cents or 8.75% to $6.05 after the company said discussions to spin off its solar-energy subsidiaries have ended without an agreement. The Cambridge, Ont.,-based firm, which makes machinery and equipment for industrial and automotive markets, had been exploring the sale of its solar businesses in France and Ontario, or a combined sale of both operations.