Premarket: Popping higher on Europe

Global stocks perked up, anticipating action from European leaders to prevent the sovereign debt crisis from deepening.

Britain's FTSE 100 rose 1.4 per cent, France's CAC 40 surged 3.7 per cent and Germany's DAX leapt 3.8 per cent. Banking stocks were among the biggest gainers.

Dow futures gained 1.3 per cent and S&P 500 futures rose 1.7 per cent.

German Chancellor Angela Merkel warned of the dangers a radical restructuring of Greek debt might bring at this stage, in an interview on German television. She also said Europe must erect a firewall around Greece to prevent market attacks on other European nations that could break up the euro zone.

Speculation that the European Central Bank might cut interest rates to help the economy also fuelled a rise in stocks. ECB governing council member Ewald Nowotny was quoted as saying that the possibility of interest rate cuts should not be ruled out.

European officials also said they would work on ways to beef up their existing €440-billion bailout fund after finance ministers meeting in Washington urged them to increase the size of the fund to counter the debt crisis, a sign that global policy makers are starting to build a co-ordinated response.

The markets' gains follow tremendous volatility last week, when investors grew convinced that the global economy was slipping into recession amid helplessness that officials would be able to solve the European debt crisis. Major stock market indexes fell sharply and investors rushed into the safety of U.S. government bonds and the U.S. dollar, sending commodity prices down.

Someone forgot to tell the metals markets about the new optimism. Concerns over economic growth continued to roil copper, which slumped to a 15-month low, falling more than 6 per cent. Copper for three month delivery on the London Metal Exchange fell to $6,800 (U.S.) a tonne. More volatility is expected this week as margin requirements are due to be tightened on September 29.

Gold was set for its biggest three-day loss in 28 years, as investors fled commodity markets to secure cash in the face of mounting fear over the impact of a potential Greek debt default on the rest of the euro zone.

Gold fell 2.8 per cent to $1,637, while spot silver dropped more than 16 per cent to $26.04, a level not seen since November 2010. Platinum was down more than 6 per cent and palladium fell 3.4 per cent.

U.S.crude oil rose 0.6 per cent to $80.33 a barrel.

The loonie traded at 97.30 U.S. cents.