TSX set to open up on ECB loan boost

(Reuters) - Toronto's main stock index was set to edge higher at the open on Wednesday after European banks absorbed more than half a trillion euros as part of a European Central Bank effort to stabilize the euro zone's financial system.

Banks grabbed 530 billion euros at the central bank's second offering of cheap three-year funds, fuelling expectations that credit will flow to businesses and borrowing costs will ease for governments hit by the euro zone crisis.

FACTORS TO WATCH

* Canadian equity futures pointed to a higher open.

* The Canadian dollar surged to its strongest level in more than 5 months against the U.S. dollar after a robust uptake of the ECB's latest offer of cheap loans buoyed riskier assets.

* U.S. stock index futures edged up after the ECB operation. (.N)

* The euro dipped to a session low against the dollar in volatile trade while European stocks gained and German Bunds fell after the ECB move.(.EU)

COMMODITY PRICE MOVES

* The Thomson Reuters-Jefferies CRB index (.CRB), a global commodities benchmark, fell 0.02 percent in early trade.

* Brent crude oil gained more than $1 per barrel, snapping two days of sharp falls.

* Gold eased, reversing a brief move higher after the ECB fed cash-hungry commercial banks over half a trillion euros in cheap loans, further greasing the wheels of the financial system, but depressing the value of the euro.

* Copper prices rallied to a more than two-week high after banks snapped up more than 500 billion in cheap funding from the ECB aimed at injecting liquidity into the market, helping risky assets push higher.

CANADIAN STOCKS TO WATCH

* Quadra FNX (Toronto:QUX.TO - News): Europe's copper producer KGHM said Canada's Minister of Industry agreed for its takeover of the Canadian rival, clearing the last obstacle for the C$3 billion deal.

* Toronto-Dominion Bank (Toronto:TD.TO - News): The U.S. arm of the bank has reached a settlement with investors who claimed it helped a South Florida lawyer convicted of running a $1.2 billion Ponzi scheme, a bank spokeswoman said on Tuesday.

ANALYST RECOMMENDATIONS

Following is one of the research actions on Canadian companies reported by Reuters:

* Lake Shore Gold Corp. (Toronto:LSG.TO - News): RBC cuts price target to C$2.70 from C$3

($1= $0.98 Canadian)

(Reporting by Chandra Ramarathnam; Editing by Jeffrey Hodgson)