North American markets look set to open higher Tuesday after the U.S. Federal Reserve announced it is expanding a securities lending program.

To promote liquidity and “foster the functioning of financial markets more generally,” the Fed today said it is expanding its securities lending program. The Fed will lend up to US$200 billion of Treasury securities to primary dealers secured for a term of 28 days, rather than overnight, as in the existing program.

Canada’s merchandise trade surplus with the world expanded by about $1 billion in January, as exports increased at their fastest pace in more than a year. The surplus expanded from a revised $2.3 billion in December to $3.3 billion.

At the same time, the value of merchandise imports rose 1.0% to $34.7 billion, the third increase in a row.

South of the border, the U.S. trade deficit widened in January as the price for oil set a new record, but the shortfall was smaller than expected, with exports making their largest climb in six months.

The U.S. deficit in international trade of goods and services increased by 0.6% to US$58.20 billion from December;s revised $57.86 billion, the U.S. Commerce Department said today.

The January deficit was short of Wall Street expectations. Economists had estimated a $59.75 billion shortfall.

In earnings news, Texas Instruments lowered first-quarter estimates, blaming demand from wireless, and one customer in particular.

Oil prices reached a new trading high, reflecting the further weakening of the dollar. Light, sweet crude for April delivery surged to US$109.20 in midday European electronic trading on the New York Mercantile Exchange before falling back to US$108.75. That is still 10¢ above the previous trading high set Monday.

Overseas, the FTSE 100 rose 1.8% in London and the Nikkei 225 advanced 1% in Tokyo.

Energy and resource issues pushed Toronto markets below 13,000 Monday, as oil reached a record US$108 but gold prices tumbled.

The S&P/TSX composite index recovered from the session’s low, but still closed down 276.63 points, or 2.08%, at 13,005.09.

The heavyweight energy group fell 1.60%.

In individual stocks, BCE shares gained $1.92, or 5.36%, to close at $37.72, after a Quebec court approved the proposed buyout of the telecom giant by a consortium led by the Ontario Teachers’ Pension Plan on Friday.

The junior S&P/TSX Venture composite index closed down 64.33 points, or 2.36%, to end at 2,664.13.

In New York, the Dow Jones industrial average fell 153.54 points, or 1.29%, to end at 11,740.15.

The S&P 500 closed down 20 points, or 1.55%, to end at 1,273.37.

Meanwhile, the tech-heavy Nasdaq composite index lost 43.15 points, or 1.95%, ending at 2,169.34.