The Toronto stock market was set for a strong open Tuesday as commodity prices rose sharply in the wake of data indicating that China is managing to avoid an abrupt economic slowdown.

The Canadian dollar was up 0.42 of a cent to 98.65 cents US ahead of the Bank of Canada’s scheduled announcement on interest rates. The central bank was widely expected to leave its key rate unchanged at one per cent.

U.S. futures pointed to a solid gain as traders got back to work from the Martin Luther King holiday, with the Dow Jones industrial futures running ahead 100 points to 12,490, the Nasdaq futures gaining 23.25 points to 2,396.75 and the S&P 500 futures rising 12 points to 1,300.9.

China reported its economy grew 8.9% in the final quarter of last year, down from 9.1% in the third quarter and the slowest in 2 1/2 years. But markets had been expecting a bigger decline to 8.7% and the data also showed that December retail sales and factory output accelerated.

The Chinese government moved to slow its economy last year to deal with high inflation. But leaders have recently started easing lending to encourage growth in the face of plunging export demand from the U.S. and Europe.

There have been worries that Chinese officials would be unable to engineer a soft landing for the economy.

A growing Chinese economy has been an important source of support for a struggling global economy and, in particular, has boosted prices for oil and metals and in turn energy and mining stocks on the resource-heavy TSX.

The Chinese data sent commodity prices up sharply with the February crude contract on the New York Mercantile Exchange up $2 to US$100.70 a barrel.

March copper gained 11 cents to US$3.74 a pound while February gold bullion climbed $32.80 to US$1,663.60 an ounce.

Meanwhile, Greece remained the epicentre of the European debt crisis and is struggling to reach a deal with private creditors to get them to accept a reduction in the value of their holdings of Greek debt.

Without a deal with its private creditors, Greece has been told it won’t get the next tranche of money due from its first bailout.

If it doesn’t get that money, Greece would be unable to pay a big bond redemption in March, potentially triggering mayhem in financial markets.

A deal with private investors, known as the Private Sector Involvement, or PSI, aims to reduce Greece’s debt by €100 billion by swapping private creditors’ bonds for new ones with a lower value. It is a key part of a €130-billion international bailout, the second one for Greece.

It is expected that talks on the PSI will resume on Wednesday after being abandoned last Friday.

European markets racked up solid gains as London’s FTSE 100 index gained 0.74%, Frankfurt’s DAX climbed 1.72% and the Paris CAC 40 was up 1.24%.

Earlier in Asia, sentiment had been supported by the Chinese growth figures.

In China, the benchmark Shanghai Composite Index jumped 4.2% and the Shenzhen Composite Index of China’s second, smaller exchange, surged 5.1%.

Hong Kong’s Hang Seng soared 3.2% while Japan’s Nikkei 225 index rose 1.1%.

There was some major Canadian dealmaking in the real estate business.

Commercial property owner Dundee Real Estate Investment Trust (TSX:D.UN) is buying Whiterock REIT (TSX:WRK.UN) in a transaction valued at $582.1 million. The move combines two of Canada’s most prominent commercial and industry property owners, giving shareholders either $16.25 in cash or 0.4729 Dundee REIT units.

Elsewhere, TD Ameritrade said its fiscal first-quarter net income grew five per cent to US$152 million. The online brokerage’s revenue was almost unchanged as trading activity slowed amid worries about the economy.