TORONTO - The Toronto stock market headed for a strong open Tuesday amid hopes that the Chinese government will move to launch stimulus measures to arrest a slowing economy.

Addressing the World Economic Forum Tuesday, China’s premier Wen Jiabao promised more tax cuts and measures to boost consumer spending.

The Canadian dollar was up 0.52 of a cent to a 13-month high of 102.82 cents US as the greenback weakened ahead of the wrapup of the Fed’s two-day meeting on interest rates. The U.S. central bank could announce another round of quantitative easing, which would see the Fed print more money to buy up bonds in order to keep interest rates low and encourage lending.

U.S. futures were positive as the Dow Jones industrial futures gained 40 points to 13,277, the Nasdaq futures advanced 7.8 points to 2,792.2 and the S&P 500 futures were ahead 4.8 points to 1,431.2.

Expectations that the Fed would move on another jolt for the economy increased after jobs data released Friday failed to meet modest expectations of 125,000 new jobs. Instead, the economy cranked out 97,000 jobs and employment numbers for June and July were revised downward.

However, there is a degree of uncertainty as to whether the Fed will act now, especially as it may not want to become a key point of debate in the upcoming U.S. presidential election.

The commitment from the leader of the world's second-biggest economy came a day after data showed that China’s economic slump is worsening.

Imports declined 2.6 per cent from a year earlier during August, below analysts’ expectations of growth in low single digits. That came on top of August’s decline in factory output to a three-year low and other signs growth is still decelerating despite repeated stimulus efforts.

A slowing Chinese economy is particularly bad news for commodity prices and stocks on the resource-intensive Toronto stock market.

Traders also looked ahead to an important court decision being handed down on Wednesday.

A German court is expected to rule on a request to block the country’s approval of the eurozone’s permanent bailout fund, the European Stability Mechanism, or ESM.

The Germany Federal Constitutional Court on Tuesday rejected a last-minute plea to postpone its ruling.

The postponement plea was brought by Peter Gauweiler, a backbench lawmaker with Chancellor Angela Merkel’s conservative bloc and other plaintiffs. They had argued the European Central Bank’s decision last week to buy up government bonds "created a completely new situation" regarding whether the €500 billion fund was constitutional.

The court’s decision on the injunction is widely anticipated as a harbinger of how it might rule on the constitutionality of the ESM overall.

Spain will also be in the spotlight this week as the government decides whether to tap a European Central Bank bond-buying program, that is largely-designed to keep a lid on the country’s borrowing rates.

Comments by Spanish Prime Minister Mariano Rajoy on Monday raised more questions than they answered. Rajoy said there were "certain red lines" he won’t cross if Spain asks the eurozone’s bailout funds for help, a move that would trigger the ECB’s bond buying under strict conditions.

Commodities were little changed with October crude on the New York Mercantile Exchange off penny to US$96.53 a barrel.

December copper on the Nymex was unchanged at US$3.69 a pound while December bullion gained $3 to US$1,734.80 an ounce.

European bourses were lower with London's FTSE 100 index down 0.33 per cent, Frankfurt's DAX dipped 0.03 per cent and the Paris CAC 40 declined 0.5 per cent.

Earlier in Asia, Japan’s Nikkei 225 index sank 0.7 per cent but Hong Kong’s Hang Seng reversed earlier losses to close 0.2 per cent higher. Mainland Chinese stocks also fell, with the Shanghai Composite Index losing 0.7 per cent.

In corporate news, U.S. mall owner General Growth Properties, Inc., whose major shareholder is Toronto-based Brookfield Asset Management (TSX:BAM.A), has rejected an activist investor's push for a sale of the company to a rival American mall owner. The board of directors at GGP filed a letter Monday to Bill Ackman's Pershing Square Capital saying that it has decided to continue its current path for growth.

Qatar Holding, a major shareholder of mining group Xstrata, said Tuesday it has made no decision yet on whether to accept Glencore International’s latest offer to salvage a multibillion-dollar merger bid for the Anglo-Swiss company. The government-run investment firm is Xstrata’s second-largest shareholder. It had pushed for better terms for Xstrata, and its opposition to the original bid threatened to scuttle the entire deal.

Glencore, a Swiss commodities trader, said Friday it was raising its bid to 3.05 shares for each Xstrata share, up from its original 2.8 shares offer.

News from © The Canadian Press, 2012