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A trader reacts at his desk at the Frankfurt stock exchange June 11, 2012. (ALEX DOMANSKI/REUTERS)
A trader reacts at his desk at the Frankfurt stock exchange June 11, 2012. (ALEX DOMANSKI/REUTERS)

Premarket: Commodities up, euro rally slows Add to ...

The Toronto stock market headed for a positive open Monday after Spain admitted it needed help in recapitalizing its debt-laden banks and secured a bailout for the sector.

The Canadian dollar was higher as relief over the deal pushed the U.S. dollar lower and commodities higher, up 0.17 of a cent to 97.54 cents US.

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U.S. stock index futures pointed to gains on Monday, putting Wall Street on track to extend its recent rally.

That would follow the trend set buy European stocks, which leapt on Monday as a bigger-than-expected bailout deal for Spain’s ailing banks prompted investors to scoop up financial shares.

Dow Jones industrial futures rose 0.9 per cent to 12,613 and S&P 500 futures 0.9 per cent higher at 1,334.30.

In the U.S., cyclical stocks like energy and financials are likely to rally on the sign of progress in tackling Europe’s debt issues. The sectors are tied to the pace of economic growth, which the debt crisis has called into question. In part because of uncertainty stemming from the euro zone, U.S. companies are finding it more difficult to grow their revenue now than at just about any time since the financial crisis.

Bank of America Corp rose 2.2 per cent to $7.73 in premarket trading while Citigroup Inc added 1.1 per cent to $28.08.

Gains by commodity stocks and banks drove Britain’s leading shares higher on Monday, as investors’ returned to heavily sold sectors.

London’s FTSE 100 index was up 42.79 points, or 0.8 per cent to 5,477.88, falling back from a session peak at 5,536, having pushed back above the 5,500 level for the first time in nearly a month.

Frankfurt’s DAX 30 advanced 1.94 per cent to 6,249.56 points and in Paris the CAC 40 gained 1.69 per cent to 3,103.42 points. Madrid’s IBEX 35 advanced almost 6.0 per cent in early trade, before pulling back to 6,721.8 points, up 2.59 per cent.

However, there are worries the rally could be short lived as questions emerged on the structure of the package.

The euro retreated from a near three-week high against the U.S. dollar on Monday as doubts lingered over whether a Spanish bank bailout could solve the country’s debt problems, with markets also cautious ahead of Greek elections at the weekend.

The euro zone agreed to lend its fourth largest economy up to 100 billion euros to help prevent a run on banks, offering some reassurance to investors and helping the common currency jump more than 1 per cent to $1.2672 in Asian trade.

Gold also slowed on Monday as investors still wary after last week’s price drop sold the metal above $1,600 an ounce, erasing gains it made on the back of the euro surge.

Spot gold was little changed at $1,593.20 an ounce at 0934 GMT, having earlier touched a high of $1,607.95.

“A bailout for the European banks is a positive for the euro and in a way a positive for gold, but it may take some of the risk attraction of gold away, so there is some negativity there as well,” Mitsui Precious Metals analyst David Jollie said.

Oil, however, jumped above $85 a barrel Monday.

Benchmark oil for July delivery was up $1.25 to $85.35 per barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 72 cents to settle at $84.10 in New York on Friday.

In London, Brent crude for July delivery was up 93 cents at $100.40 per barrel on the ICE Futures exchange.

Asian stocks also gained ground earlier in the day following better-than-expected data on the weekend that showed China's exports jumped in May from a year earlier.

Japan's Nikkei 225 index climbed 2 per cent to close at 8,624.90. South Korea's Kospi added 1.7 per cent to 1,867.04 and Hong Kong's Hang Seng added 2.4 per cent to 18,953.63. Benchmarks in Singapore, Taiwan, mainland China, Indonesia and New Zealand also rose.

With files from The Canadian Press, Reuters and The Associated Press

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