Source: The Canadian Press

North American stock markets looked set for a strong open after the European Union committed massive amounts of money to prevent the government debt crisis from spreading and choking off a global economic recovery.

New York’s Dow Jones industrial average futures surged 386 points to 10,721 after the European Union and International Monetary Fund pledged to make nearly $1 trillion available in loans if needed to defend the euro and the eurozone.

In addition, the European Central Bank exercised what analysts called its “nuclear option” Monday, announcing it would intervene in bond markets as part of the wider effort to snuff out the continent’s debt crisis.

The Nasdaq futures jumped 84 points to 1,932.5 while the S&P 500 futures ran ahead 50.2 points to 1,157.2.

The moves by the European Union also pushed the Canadian dollar, the euro and commodity prices sharply higher after investors had piled into the safe haven of the U.S. dollar over the last few weeks.

The loonie surged 2.11 cents to 97.91 cents US after going as low as 93.02 cents last Thursday. The euro shot up to US$1.30 after sliding to a 14-month low of $1.2523 on Friday.

“Default risk has been quashed and the market reaction has been euphoric,” said Jane Foley, research director at Forex.com in London.

Meanwhile, the U.S. Federal Reserve reopened its dollar swap operations, in which it offers billions of dollars overseas to boost banks’ cash positions in return for foreign currency. Other central banks, including the Bank of Canada, the Bank of England, the ECB, the Bank of Japan and the Swiss National Bank, are also involved in the effort.

The good news from Europe came after markets fell heavily last week on worries that the debt crisis would spread from Greece to other countries with unsustainably high debt levels such as Spain and Portugal.

The TSX tumbled more than 4% while the Dow industrials fall almost 6% during one of the worst weeks since the height of the financial crisis in the latter part of 2008.

The June crude contract on the New York Mercantile Exchange advanced $3.15 to US$78.26 a barrel. Demand worries had also pushed crude prices down more than US$10 a barrel last week.

Gold prices had also shot higher because of investor nervousness but on Monday the June bullion contract on the Nymex was down $17.90 to US$1,192.50 an ounce.

Copper prices also rebounded with the July contract ahead a dime to US$3.25 a pound.

In Britain, investors put aside any concerns regarding the formation of a new government and sent the FTSE 100 index of leading shares up 5.2%.

And in Germany, uncertainty related to defeat in a regional election for Chancellor Angela Merkel were similarly downplayed — the DAX index spiked 4.89% while France’s CAC-40 was the best-performing major index in Europe, surging 8.6%.

Earlier, Asian investors applauded the EU’s moves, even though the debt crisis is a particularly European concern at the moment. Japan’s Nikkei 225 stock average ended 1.6% higher while Hong Kong’s Hang Seng index jumped 2.5%.

In corporate news, drilling and well-servicing company Ensign Energy Services Inc. (TSX:ESI) saw its first-quarter profit fall by 45% from the same time last year to $40 million or 26 cents per share. Revenue declined 12% to $352.8 million because of lower pricing for its services along with the negative impact of the stronger dollar on revenues from the United States and other international operations.

Commercial printer Worldcolor (TSX:WC) narrowed its net loss to $US$29 million in the first quarter from $126 million last year. Three month revenues fell to $692 million from $752 million.

Worldcolor restructured its operations under bankruptcy protection last year, when it was known as Quebecor World.