TORONTO – The Toronto stock market could be in for some gains Tuesday following a string of losses on concerns about the prospect of the U.S. Federal Reserve turning off the stimulus taps and trouble in China’s credit system.

The Canadian dollar was up 0.09 of a cent to 95.46 cents US after a stronger U.S. dollar pushed the loonie down Monday to its lowest levels since October 2011.

U.S. futures were positive with the Dow industrial futures ahead 88 points, the Nasdaq up 20 points and the S&P 500 index climbed 11 points.

Both Toronto and New York markets racked up triple digit slides on Monday as traders gauged the effect from China raising its interbank lending rate to over 13 per cent as part of an effort to trim off-balance-sheet lending that could threaten the financial stability of the world’s second-largest economy.

But markets feared the move could also hurt economic growth. China’s major state-owned banks are unwilling to lend to any but their biggest clients, so the vast majority of smaller businesses must rely on informal lending.

Markets also continued to sell off on worries that the U.S. Federal Reserve is prepared to put the brakes on its program of bond buying. Those US$85 billion of purchases every month have kept long-term rates low and helped many stock markets to rise sharply this year.

Rising bond yields have also spooked markets. Yields have spiked to almost two-year highs — as much as 2.6 per cent on Monday. The yield on the benchmark 10-year Treasury stood at 2.25 per cent last Wednesday before Fed chairman Ben Bernanke indicated that the Fed could start winding up the bond buying program later this year.

Traders also took in some major acquisition news in the health care sector.

Two of Canada’s largest medical lab operators will be combined under a $1.22 billion friendly takeover deal backed by one of Ontario’s largest public sector pension funds. Assuming the deal is approved, LifeLabs Medical Laboratory Services will pay $10.75 per share cash and assume $255 million of debt to acquire all of CML HealthCare Inc. of Mississauga, Ont. (TSX:CLC).

LifeLabs serves about 10 million patients and nearly 20,000 physicians in Canada, mainly in Ontario and British Columbia. CML HealthCare Inc. has 112 client care centres in Ontario. It also has 82 imaging centres in Ontario and British Columbia but has been divesting its imaging business to focus more on its medical diagnostic labs.

Commodity prices were positive following a series of steep losses caused by demand concerns and the higher U.S. currency. The July copper contract on the New York Mercantile Exchange was ahead four cents at US$3.07 a pound.

August crude on the Nymex was 50 cents higher to US$95.68 a barrel.

And August bullion rose $7.60 to US$1,84.70 an ounce.

Earlier in Asia, the Shanghai Composite Index fell another 0.2 per cent after plunging nearly 6 per cent the day before, its biggest loss in four years.

Elsewhere, Hong Kong’s Hang Seng rose 0.2 per cent, Japan’s Nikkei 225 shed 0.7 per cent, South Korea’s Kospi dropped one per cent and Australia’s S&P/ASX 200 was down 0.3 per cent.

European bourses were positive as London’s FTSE 100 index rose 1.06 per cent, Frankfurt’s DAX gained 1.52 per cent and the Paris CAC 40 climbed 1.4 per cent.