10/24/2011 08:28 EDT | Updated 12/24/2011 05:12 EST

Loonie up amid hopes for European debt crisis plan, positive Chinese data

TORONTO - The Canadian dollar advanced close to parity Monday as traders awaited details of a plan to resolve the eurozone's debt crisis and took in strong Chinese economic data.

The loonie rose 0.55 of a cent to 99.69 cents US, helped by support from commodity prices, which moved higher amid data showing an expanding economy in China.

European leaders are expected to unveil details Wednesday of a plan which is likely to include measures to recapitalize the region's banks. The banks are expected to accept steep losses on Greek debt as well as boost the eurozone bailout fund.

The advance came a day before the Bank of Canada's scheduled announcement on interest rates. The central bank is widely expected to leave its key rate unchanged at one per cent.

HSBC's preliminary — or "flash" — China Manufacturing Purchasing Managers' Index climbed to 51.1 on a 100-point scale, up from 49.9 in September.

Among key sub-components of the survey, manufacturing output rose to a six-month high of 51.7, picking up from 50.3 in September, and above the 50 level which indicates expansion.

Positive Chinese data usually has a positive effect on global markets. A strong Chinese economy is considered essential for helping lift western countries from a severe economic slowdown. The December crude contract on the New York Mercantile Exchange shot up $3.87 to US$91.27 a barrel.

Copper prices also took off after slumping over five per cent last week with the December copper contract in New York ahead 23 cents to US$3.45 a pound. China is the world's biggest consumer of the metal, which is considered a barometer for economic growth as it is used in so many applications, from wiring to infrastructure.

Bullion prices also advanced with the December contract up $16.20 to US$1,652.30 an ounce.