Resource stocks looked set to support the Toronto stock market as commodity prices rose sharply amid hopes that Europe will come up with a comprehensive plan to deal with its crippling debt crisis.
Higher prices for oil and metals also helped push the Canadian dollar up 0.31 of a cent to 98.83 cents US.
U.S. markets signalled a strong open with the Dow Jones industrial futures up 93 points to 11,565, the Nasdaq futures rose 20.5 points to 2,321.5 and the S&P 500 futures were ahead 10.9 points to 1,220.8.
Traders are now looking to the middle of next week for an agreement that would deal comprehensively with the debt crisis which threatens the region’s banks and a fragile global economic recovery.
Germany and France announced Thursday afternoon that in addition to Sunday’s summit of eurozone leaders, a second meeting will be held by Wednesday at the latest.
Europe’s two biggest economies are at loggerheads over how to make best use of the bailout fund, the so-called European Financial Stability Facility, or EFSF. While France is proposing to turn into a bank, which would have access to unlimited credit from the European Central Bank, Germany appears reluctant to sanction such a move.
However, on Friday, German Chancellor Angela Merkel said her country and France agree over the main points of a plan to deal with the debt crisis.
There were also reports that Europe is considering having C940 billion available to countries that need help.
“So the possibility that some sort of plan is being lined up is giving markets hope that something concrete may actually come of this weekend’s meetings,” said BMO Capital Markets senior economist Jennifer Lee, “but how to execute said plan will be extremely complicated and an instant solution cannot be expected.”
The willingness to take on extra risk pushed commodity prices sharply higher with the November crude contract on the New York Mercantile Exchange ahead $1.15 to US$87.22 a barrel.
Copper prices recovered somewhat with the December contract ahead 15 cents to US$3.20 after tumbling 20 cents on Thursday. And the December gold contract jumped $24.40 to US$1,637.30 an ounce.
On the economic front, Statistics Canada says the country’s annual inflation rate edged up a notch to 3.2% last month. On a month-to-month basis, consumer prices rose two-tenths of a cent between August and September. The major drivers of inflation remain gasoline and food. They were up 22.7% and 4.3% respectively from a year ago.
Earlier, Asian gains were muted as Japan’s Nikkei 225 index closed little changed and Hong Kong’s Hang Seng added 0.2%.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index falling 0.6% to its lowest close in 31 months. The Shenzhen Composite Index lost 1.6%.
European markets were positive as London’s FTSE 100 index climbed 1.42%, Frankfurt’s DAX gained 2.28% and the Paris CAC 40 charged ahead 1.65%.
In earnings news, General Electric Co. said Friday that its third-quarter profit rose 18% to US$2.34 billion as its lending business continues to rebound.
Excluding a large dividend payout to Warren Buffett’s Berkshire Hathaway, GE’s profit came in at 31 cents per share, which met expectations. Revenue was flat at $35.4 billion but still beat expectations but its shares were down 1.22% in pre-market trading in New York.
Precision Drilling Corp. (TSX:PD) reported quarterly profit of $83 million or 29 cents per diluted share, up from $56 million a year ago. Revenues rose 37% to nearly $493 million from $359.1 million. Analysts polled by Thomson Reuters were on average expecting Precision to report earnings of 21 cents per share and revenues of $511 million.