Toronto Stock Exchange to see some gains at the open on hopes of China stimulus

TORONTO – The Toronto Stock Exchange appeared set to take back some gains at the open Thursday as commodity prices gained ground on expectations China may move to stimulate its economy.

The Canadian dollar lifted 0.22 of a cent to 101.72 cents US as investor sentiment improved slightly.

Wall Street was headed for a higher open, with the Dow futures ahead 69 points to 13,414, the Nasdaq futures 12.75 points higher at 2,787 and the broader S&P 500 futures up 8.1 points at 1,435.

Meanwhile, the benchmark New York oil contract was ahead $1.20 at US$91.19 a barrel, the December gold contract added $10.10 to US$1,763.70 an ounce and the December copper contract rose three cents to US$3.74 a pound.

The market gains started earlier, in Asia, helped by expectations that the People’s Bank of China will soon take more steps to stimulate the world’s No. 2 economy, which has been slowing down. The country is a big consumer of commodities for its manufacturing sector.

Worries about a slowing Chinese economy have combined with unrest in Europe to pressure the market this month.

There was also a bit of respite in Europe. Greek officials said Thursday that after weeks of fruitless efforts, the heads of the three parties in Greece’s governing coalition have struck a basic deal on a new round of harsh austerity measures required for the country to continue getting vital rescue loans.

Though the mood in markets has improved modestly, investors remain concerned about developments in Europe, where Greece and Spain have witnessed violent protests against debt reduction measures due to be announced this week.

Greater focus will probably centre on Spain, where the government is to unveil new austerity policies later Thursday amid mounting concerns over the country’s economic future.

Recession-hit Spain has come under pressure to tap a bond-buying program from the European Central Bank that has been partly designed to keep a lid on the country’s borrowing costs. But the government has been reluctant to request the help for fear of the conditions attached.

Spain’s new austerity package, due to be unveiled toward the end of the European trading session, comes in the wake of a violent protest in Madrid and big falls in Spanish stocks.

However, the FTSE 100 index of leading British shares was up 0.3 per cent while Germany’s DAX rose 0.4 per cent and the CAC-40 in France was 0.8 per cent higher.

Meanwhile, traders will take in Canadian data on payroll employment, earnings and hours.

Later in the morning, investors will be watching U.S. reports on weekly unemployment claims, business orders for durable goods in August and a final estimate of gross domestic product for the April-to-June quarter.

In Canadian corporate news, a glimpse into the state of struggling BlackBerry maker Research In Motion (TSX:RIM) will be revealed when the company releases its second-quarter financial results after markets close.