Source: The Canadian Press

The Toronto stock market headed for a positive open Tuesday amid higher commodity prices, more positive earnings from the financial sector and a deal to extend tax breaks and unemployment benefits in the U.S.

The Canadian dollar was higher ahead of a scheduled Bank of Canada announcement on interest rates, up 0.35 of a cent to 99.82 cents US. The central bank is expected to leave its key rate unchanged at 1%.

U.S. futures also rose with the Dow Jones futures ahead 84 points to 11,437, the Nasdaq futures up 18.25 points to 2,209 and the S&P 500 futures rose 11 points to 1,233.

Futures surged after U.S. president Barack Obama announced an agreement with Republicans Monday night to extend the Bush-era tax cuts for two years, while also renewing unemployment benefits and granting a one-year reduction in Social Security taxes.

The deal still requires Congressional approval. Yet it gives investors encouragement, since tax cuts were set to expire at the end of the year.

Meanwhile, Bank of Montreal (TSX:BMO) ended a run of generally positive quarterly reports from the big Canadian banks. It reported that profits rose 14% to $739 million in the fourth quarter, beating expectations.

The bank says its net income was equal to $1.26 on a cash per share basis, about five cents above analyst expectations according to a survey from Thomson Reuters.

Oil prices rose to a two-year high above US$90 a barrel on Tuesday due to the effects of a weaker dollar and as icy weather in Europe and the U.S. increased demand for fuel.

The January crude contract on the New York Mercantile Exchange was up 96 cents to US$90.34 a barrel.

Oil prices have climbed more than US$10 in the past two weeks.

Metal prices also made gains with the March copper contract on the Nymex ahead a dime to US$4.11 a pound while February gold in New York climbed $11.80 from Monday’s latest record high close to US$1,427.90 an ounce.

Overseas, China’s benchmark Shanghai Composite index rebounded from early losses to gain 0.7%, despite speculation that Beijing may hike interest rates soon. Hong Kong’s Hang Seng Index, meanwhile, also bounced back to rise 0.8%.

China, a key growth driver for the world, is grappling with how to douse rising prices and cool its still red-hot economy without causing too fast a slowdown. November inflation, which analysts say might show a further increase, is due out Monday.

London’s FTSE 100 index gained 1.3%, Frankfurt’s DAX was up 1.08% while the Paris CAC 40 rose 2.07%.