Source: The Canadian Press

The Toronto stock market appeared headed for a higher open following a flat denial from China that it was considering cutting its exposure to European debt.

The announcement also had a positive effect on currencies with the Canadian dollar up 1.31 cents to 94.89 cents US while the euro also strengthened.

U.S. futures also moved sharply higher following that key reassurance that China had no plans to sell eurozone bonds and the Dow Jones industrial futures surged 190 points to 10,111, the Nasdaq futures were ahead 41.75 points to 1,833.25 and the S&P 500 futures were up 25 points to 1,086.2.

The agency that manages China’s US$2.5 trillion foreign reserves also expressed confidence Europe will restore its financial stability.

China’s State Administration of Foreign Exchange, which rarely comments on its activities, said talk of a review was “groundless” and stressed that the European market “in the past, present and future always will be one of (its) the major investment markets.”

A Financial Times report that China was reviewing its European investments had erased strong advances on North American markets on Wednesday.

Markets have been volatile for weeks on worries about how European growth could stall as countries such as Greece, Italy, Portugal and Spain slash their spending to deal with heavy debt loads.

The TSX should find wide support from oil and mining stocks as most commodity prices rose sharply following the reassuring noises from China with the July crude contract on the New York Mercantile Exchange ahead $1.78 to US$73.29 a barrel.

The July copper contract on the Nymex rose four cents to US$3.12 a pound while June bullion in New York slipped $1.20 to US$1,212.20.

However, performance in the financial sector is likely to be negative after earnings reports from three of the big Canadian banks missed expectations.

Royal Bank of Canada (TSX:RY) had a $1.3-billion profit in its second quarter, much better than the $50 million loss it handed in a year ago but earnings were below analyst estimates. The bank’s net income amounted to 88 cents per share, on a diluted basis. Cash EPS was 96 cents per share, well below the $1.08 that analysts had expected .

CIBC (TSX:CM) had $660 million in net income for its fiscal second quarter. That compared with a $51-million loss reported by the bank during the comparable period last year. Excluding certain items, the company earned $1.46 per share, compared with analysts’ average estimate of $1.50 per share.

TD Bank Financial Group (TSX:TD) more than doubled its second-quarter profit. Net income was nearly $1.2 billion, before adjustments, up from $545 million a year earlier. Excluding one-time items, the bank said adjusted income came in at $1.36 a share, two cents below analyst expectations.

National Bank (TSX:NA) also reports quarterly earnings Thursday.

The financial sector had taken on a more positive tone on Wednesday after Bank of Montreal (TSX:BMO) beat earnings expectations as their profit doubled from a year ago to $745 million.

Overseas markets also rose as investors put Europe’s debt problems behind them — for now.

London’s FTSE 100 index moved up 1.89%, Frankfurt’s DAX was up 2.38% the Paris CAC 40 was up 1.98%.

In Asia earlier, Japan’s Nikkei 225 stock average rose 1.2% while South Korea’s Kospi jumped 1.6% and Australia’s S&P/ASX 200 index gained 1.7%.

Hong Kong’s Hang Seng added 1.2%.

In other corporate news, Costco Wholesale Corp.’s profit climbed 46% in the fiscal third quarter as sales and membership revenue both rose. The wholesale club operator said Thursday that it earned $306 million, or 68 cents per share. That’s up from $210 million, or 48 cents per share, a year ago. Revenue rose 12% to $17.78 billion.

Food maker H.J. Heinz Co. said Thursday that rising sales in emerging markets pushed its fourth-quarter net income up 9.7% to US$192.4 million or 60 cents per share. That compares with $175.1 million or 55 cents per share in the same period last year. Revenue rose 8.3% to US$2.72 billion.

According to Thomson Reuters, analysts expected earnings per share of 59 cents on revenue of $2.75 billion.