TORONTO - The Toronto stock market was headed for a higher open Friday after being closed for two days for Christmas and Boxing Day.

The Canadian dollar dipped 0.38 of a cent to 93.79 cents US.

The Dow Jones industrial futures was ahead 17 points to 16,439, the Nasdaq futures jumped 2.7 points to 3,584.50 and the S&P 500 futures climbed 1.3 points to 1,837.70.

Wall Street reopened Thursday after being closed on Dec. 25 and gained ground, setting a new record high close for the Dow Jones industrial average.

Investors were encouraged by figures that showed a sharp drop in the number of Americans applying for unemployment benefits last week, another sign that the economy is faring better than expected.

The U.S. Labor Department reported Thursday that the number of people applying for unemployment benefits dropped by 42,000 last week to a seasonally adjusted 338,000, the biggest drop since November 2012.

But economists say the figures from late November and December may be warped by seasonal volatility around the Thanksgiving, Christmas and New Year's holidays. The Labor Department reported that the less-volatile four-week average rose 4,250 to 348,000.

Although Friday is a regular trading day in Toronto and in the U.S., it's expected to be a quiet one with no economic news set for release in either country and with markets closing again for the weekend.

But a sense of optimism continued overnight as markets in China and elsewhere surged on signs of a positive U.S. job market. More employment could mean more U.S. orders to drive exports from those countries.

Tokyo's Nikkei index initially shed 0.3 per cent in early trading Friday as traders apparently sold off to collect profits from a five-year high the previous day, but the shares recovered to close slightly higher at 16,178.14 on optimism that a weaker yen would boost exports. The Nikkei is up more than 50 per cent since Jan. 4.

Hong Kong's Hang Seng index rose by 0.2 per cent to 23,231.86, and China's Shanghai composite gained 1.4 per cent to 2,199.06, after the Chinese Cabinet said this year's economic growth would be 7.6 per cent, down only slightly from last year's 7.7 per cent. Fears of a sharp slowdown in the world's second-largest economy had fuelled market jitters earlier in the year.

South Korea's Kospi index edged 0.2 per cent higher to 2,002.20, while Taiwan's Taiex rose 0.6 per cent to 8,535.04. The Sensex index on India's Bombay Stock Exchange was up 0.7 per cent to 21,219.40.

European traders also joined in the post-holiday cheer, with Germany's Dax index rising 0.7 per cent in early trading to 9,559.20, the FTSE index of major British stocks up 0.5 per cent to 6,724.99 and France's CAC up 0.7 per cent to 4,245.66.

This rally follows the U.S. Federal Reserve's decision last week to start reducing its monetary stimulus by $10 billion, to $75 billion a month starting in January. Many had feared the decision to rein in its policy of quantitative easing, or QE, would be negative for stocks as the stimulus has shored up markets over the past few years.

Commodities were mixed as the February crude jumped 12 cents to US$99.67 a barrel. Gold prices dipped 40 cents to US$1,211.90 an ounce, while March copper fell two cents to $3.38 a pound.

News from © The Canadian Press, 2013