TSX set to advance amid positive German data, rising crude prices

U.S. futures were higher as the Dow Jones industrial futures gained 61 points to 12,004, the Nasdaq futures advanced 15.75 points to 2,306.25 and the S&P 500 futures were ahead 7.4 points to 1,236.7.

There was some rare good news from the eurozone as a closely watched survey showed that German investor sentiment rose in December following nine straight falls.

ZEW’s main investor sentiment index for December rose 1.4 points to minus 53.8 points overall. However, analysts had forecast a bigger rise to minus 52.

The survey also recorded a five point rise in economic sentiment for the 17-nation eurozone, taking the index up to minus 54.1 point.

ZEW said the increases may reflect some optimism over last Friday’s deal to adopt a new European Union fiscal pact that would see a central authority overseeing budgets and impose tighter controls on spending by member countries. This would be backed up by automatic penalties if countries spend too much.

Optimism was sorely lacking on stock markets Monday as sentiment took a hit after rating agencies Moody’s and Fitch both said the deal was insufficient and would not materially address the crushing debt loads of some nations or their rising borrowing costs.

Moody’s warned that it will review all EU governments’ ratings for possible downgrades in early 2012 — a threat that analysts said was particularly worrisome to France, a major contributor to the European Financial Stability Facility, Europe’s emergency bailout fund. A downgrade of France’s triple A rating could hurt its ability to fulfil its commitments to the fund.

Investors are also awaiting the response of rival agency Standard & Poor’s. Last week it warned that it could downgrade most of the eurozone economies, including Germany, if the deal failed to deliver.

Meanwhile, investors also looked ahead to a mid-afternoon announcement on interest rates by the U.S. Federal Reserve. The central bank is widely expected to keep interest rates near zero through next year but traders will be looking to the Fed’s latest take on the economy.

Economists think Fed officials will be completing a plan to forecast the direction of short-term rates starting next year.

Doing so would help assure investors, companies and consumers that rates won’t rise before a specific time. The new communications strategy could be unveiled as soon as next month, after the Fed’s Jan. 24-25 policy meeting.

Oil prices advanced with the January crude contract on the New York Mercantile Exchange ahead 66 cents to US$98.43 a barrel.

Copper was unchanged at US$3.46 a pound while the February gold contract gained $2.30 to US$1,670.50 an ounce.

European bourses were higher after racking up losses on Monday with London’s FTSE 100 index ahead 0.94%, Frankfurt’s DAX gained 0.83% while the Paris CAC 40 rose 0.23%.

Elsewhere in Asia, stocks took a battering following the previous day’s retreats in Europe and the U.S.

Japan’s Nikkei 225 fell 1.2%, South Korea’s Kospi gave up 1.9% and Hong Kong’s Hang Seng lost 0.7%. On mainland China, the benchmark Shanghai Composite Index fell 1.9% while the Shenzhen Composite Index lost three per cent.

In corporate news, Whistler Blackcomb Holdings Inc. (TSX:WB) says it booked net earnings of $15.1 million in period from Nov. 9, 2010 to Sept. 30. 2011. The ski and mountain resort earned 40 cents per share during that period, when Whistler Blackcomb became a public company.

Troubled Chinese timberland owner Sino-Forest Corp. (TSX:TRE) said Monday that it will not make a US$9.8-million interest payment due this week and that it will miss deadlines to release both its third-quarter results and a report on fraud allegations.