Premarket: Follow the bonds

Banks led a European stockmarket rally after Spain and Italy easily raised cheap money at debt auctions, suggesting investors have confidence in two of Europe's most troubled countries.

Britain's FTSE 100 rose 0.3 per cent, France's CAC 40 gained 1.2 per cent, and Germany's DAX climbed 1.4 per cent.

Dow futures gained 54 points, or 0.4 per cent, rising to 12,442. S&P 500 futures rose 6.2 points, or 0.5 per cent, to 1,294.4.

The Spanish Treasury raised 10-billion euros ($12.7-billion U.S.) from the auction of three bonds, doubling its target of up to five billion. Average yields eased to 3.384 per cent.

Italy easily raised 12-billion euros. In the first bond auction of the year, investors bought 8.5-billion euros in 12-month bonds at a yield of 2.735 per cent, sharply down from last month's rate of 5.95 per cent and well below the record of 6.087 per cent hit in November.

Domestic banks continued to support the auction, thanks to extremely cheap funding from the European Central Bank, which provided banks with nearly half a trillion euros of three-year money late last year and will make a similar offer in February.

The euro leapt off 16-month lows hit in recent days to $1.2756.

U.S. crude oil rose 1.3 per cent to $102.19 a barrel.

Gold gained $18.70, trading at $1,658 an ounce.

The Canadian dollar changed hands at $98.56 U.S. cents.

Equity markets in Asia lost ground earlier in the day. Japan's Nikkei 225 fell 0.7 per cent, while Hong Kong's Hang Seng edged 0.3 per cent lower.