09/27/2011 08:47 EDT | Updated 11/27/2011 05:12 EST

Canadian dollar advances amid hopes for action to resolve European debt crisis

TORONTO - The Canadian dollar closed up sharply Tuesday, supported by surging prices for commodities, while traders moved into the currency on hopes of a resolution of debt problems in Europe.

The loonie jumped 0.75 of a cent to 98 cents US.

Reports said that European officials were working on a plan to recapitalize banks in the eurozone, using leverage to bolster the European Financial Stability Facility, the euro zone’s bailout fund.

There was also relief after Greece's finance minister said Tuesday that the country will receive the next batch of bailout loans amounting to euro8 billion in time to avoid a potentially disastrous default.

Hopes that European officials can get a grip on the government debt crisis improved demand prospects and pushed commodity prices up sharply.

The November crude contract on the New York Mercantile Exchange advanced $4.21 to US$84.45 while the December copper contract on the Nymex was up 16 cents to US$3.44.

Bullion prices also recovered with the December contract ahead $57.70 to US$1,652.50 an ounce.

Meanwhile, Slovenia's parliament on Tuesday voted in favour of boosting the powers of Europe's rescue fund.

The euro440-billion fund is to buy government bonds of shaky eurozone countries like Greece or to lend money to governments before they get into a full-blown crisis. It has to be ratified by all 17 eurozone states to take force.

Finland votes on the measure Wednesday and Germany on Thursday.