Stocks to head higher as traders look for progress in fiscal cliff negotiations

TORONTO – The Toronto stock market headed for a higher open Friday as traders waited for further word on how negotiations are progressing in heading off a critical U.S. budget impasse.

Traders will be taking in the September reading on Canadian gross domestic product and U.S. consumer spending data and a key reading on manufacturing activity in the U.S.

Data released earlier in the morning showed the eurozone’s unemployment rate at a record high.

The Canadian dollar was down 0.06 of a cent to 100.67 cents US.

U.S. futures were higher as the Dow Jones industrial futures gained 17 points to 13,038, the Nasdaq futures were up six points to 2,686 while the S&P 500 futures were ahead 1.6 points to 1,417.3.

Markets closed higher Thursday at the end of a volatile session as top Republicans and Democrats offered differing views on what’s holding up a deal to avoid a fiscal cliff at the end of the year. That’s the term given to the situation that would arise from the automatic imposition of steep spending cuts and significant tax increases.

Economists believe that those cuts and increases would take a big bite out of economic growth and likely send the U.S. economy back into recession.

Republican House Speaker John Boehner on Thursday rebuffed a proposal by President Barack Obama because it lacked “sensible spending cuts.”

On the other hand, Senate Majority Leader Harry Reid said Obama is still waiting for a serious offer from Republicans.

The remarks came after Treasury Secretary Timothy Geithner presented a proposal calling for US$1.6 trillion in higher taxes over 10 years. The proposal includes plans for legislation in 2013 aimed at saving $400 billion over 10 years from Medicare and other benefit programs.

Another feature in the Geithner plan is a call for increasing the nation’s debt limit without the need for congressional approval.

Commodity prices were mixed with the January crude contract on the New York Mercantile Exchange down 27 cents to US$87.80 a barrel.

February bullion was off 40 cents to US$1,729.10 while March copper gained two cents to US$3.63 a pound.

European markets were higher amid data showing unemployment in the 17 EU countries that use the euro rose to a new record high of 11.7 per cent in October.

While the rise in the jobless rate was largely anticipated, it highlights the dire state of the currency bloc’s economy.

London’s FTSE 100 added 0.19 per cent, Frankfurt’s DAX was up 0.46 per cent while the Paris CAC 40 gained 0.29 per cent.

Earlier, in Asia, Japan’s Nikkei 225 index rose 0.5 per cent after the Japanese government released an 880.3 billion yen (US$10.7 billion) stimulus package.

Hong Kong’s Hang Seng added 0.5 per cent, Australia’s S&P/ASX 200 advanced 0.6 per cent, South Korea’s Kospi fell 0.1 per cent. Benchmarks in Taiwan, Singapore, mainland China and New Zealand also rose.