The Toronto stock market was set for a positive open Thursday as commodity prices picked up amid reports of new leadership for debt-plagued countries Italy and Greece.
The Canadian dollar was up 0.28 of a cent to 98.16 cents US as risk appetite picked up.
There was speculation that a technocratic government led by economist Mario Monti will replace Premier Silvio Berlusconi. Italy’s borrowing costs eased somewhat after spiking Wednesday as markets have lost confidence that Berlusconi can impose the tough austerity measures needed to keep Europe’s third-largest economy from defaulting on its US$2.6 trillion debt.
And former European Central Bank vice-president Lucas Papademos has been officially named the new prime minister of Greece. He replaces George Papandreou who stepped down in the wake of an ill-starred attempt to put his country’s bailout plan to a referendum.
Signs of greater stability in Europe sent U.S. futures higher with the Dow Jones industrial futures up 140 points to 11,872, the Nasdaq futures were ahead 32.25 points to 2,343.25 while the S&P 500 futures climbed 18.6 points to 1,244.2.
Stock markets fell heavily Wednesday, with the TSX tumbling 333 points and the Dow industrials falling 389 points as traders sold off anything risky on the feeling that Europe’s debt crisis is worsening amid a failure of political leaders to come up with a convincing plan to backstop heavily indebted countries like Italy and Greece.
The yields on Italy’s benchmark 10-year bond surged well above the seven per cent threshold Wednesday, a level many economists view as unsustainable. Yields rise as bond prices fall.
On Thursday, the 10-year bond yield fell 11 basis points to 7.02 per cent, according to FactSet Research.
Tensions also eased on the news that Italy easily sold C5 billion in 12-month bonds at borrowing rates which were not as bad as expected. Investors asked for an interest rate of 6.087 per cent to lend Italy 12-month money.
Though that’s up sharply from 3.57 per cent in the last such auction last month but well below analyst expectations of seven per cent.
Meanwhile, Papademos’ appointment as the new Greek PM came after after four days of intense talks to form a coalition government. The interim government aims to approve a new C130 billion financial aid deal.
Oil prices recovered from sharp price drops Wednesday on worries that a worsening European debt crisis will push the region into recession and derail a fragile global economic recovery. A worsening of economic conditions would slash demand for oil and metals, which support higher stock prices on the resource-heavy TSX.
The December crude contract on the New York Mercantile Exchange gained $1.37 to US$97.11 a barrel.
However, metal prices heded lower with the December copper contract down seven cents to US$3.37 a pound on top of a nine-cent slide Wednesday.
Bullion prices also declined as the December contract fell $21.20 to $1,770.40 an ounce.
European markets advanced following steep losses on Wednesday as London’s FTSE 100 index rose 0.59 per cent, Frankfurt’s DAX gained 1.64 per cent and the Paris CAC 40 climbed 0.72 per cent.
Earlier in Asia, Japan’s Nikkei 225 index fell 2.9 per cent while Hong Kong’s Hang Seng dived 5.3 per cent.
It was another busy day for earnings reports.
Coffee store operator Tim Hortons Inc. (TSX:THI) said profits soared 40 per cent in the third quarter to $103.6 million. Revenues totalled $726.9 million, up from $670.5 million. Same-store sales, a key metric measuring results from stores open at least a year, were up 4.7 per cent in Canada and 6.3 per cent in the United States.
Tissue and cardboard maker Cascades Inc. (TSX:CAS) lost $19 million in the third quarter as the company booked special charges for restructuring investment losses and other things. Sales for the three months rose 14 per cent to $947 million from $832 million.
The owner of the controversial New Prosperity copper project in British Columbia, Taseko Mines Ltd. (TSX:TKO), had a $30-million profit in the third quarter. The results came a day after Ottawa gave the Vancouver-based company a chance to revive the $1.2-billion proposal, which was blocked last year.
Cisco Systems Inc., the world’s largest maker of computer networking gear, is showing signs of pulling a turnaround, exceeding analyst sales expectations for the second quarter in a row. Cisco posted net income of US$1.8 billion, which compares with $1.9 billion a year ago.
Revenue grew nearly five per cent from last year to $11.3 billion.
