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Stock futures point higher on news of CIT rescue

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[July 20, 2009]  NEW YORK (AP) -- Stock futures are rising as investors welcomed media reports that commercial lender CIT Group has agreed with key bondholders on a deal that will help it avoid bankruptcy.

U.S. futures are following world markets higher after reports in The New York Times and The Wall Street Journal said CIT's board OK'd a deal late Sunday with major bondholders to receive $3 billion in emergency funding. Both the Times and the Journal cited people familiar with the matter.

The money will give the troubled company time to restructure and pay down billions of dollars in debt due later this year.

Worries about the fate of the debt-laden company have plagued investors over the past week, as CIT's problems mounted and negotiations with federal regulators for bailout funds fell through. Its failure would have been a big blow to investor confidence and would have hurt industries like retail, which has suppliers tied to the company.

Investors are also focused on the next wave of earnings reports coming this week. On Monday, companies such as Johnson Controls Inc., Boston Scientific Corp. and Texas Instruments Inc. are set to issue results.

Last week, a string of good earnings news sent market indicators soaring. Both the Dow Jones industrials and the Standard & Poor's 500 index posted their best weekly performance since early March, when the market's spring rally began. All the major indexes finished the week up about 7 percent. The huge advance came after a monthlong slide, driven by reports showing the economy was not healing as quickly as hoped.

Ahead of the market's open, Dow Jones industrial average futures rose 62, or 0.7 percent, to 8,759. Standard & Poor's 500 index futures rose 7.30, or 0.8 percent, to 944.20, while Nasdaq 100 index futures rose 9.25, or 0.6 percent, to 1,537.25.

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Bond prices fell on the CIT reports. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.66 percent late Friday.

The dollar fell against other major currencies, while gold prices rose.

Oil prices rose $1.24 to $64.80 a barrel in electronic trading on the New York Mercantile Exchange.

Overseas, Hong Kong's Hang Seng index jumped 3.7 percent. In late morning trading, Britain's FTSE 100 was up 1.7 percent, Germany's DAX index rose 1.6 percent, and France's CAC-40 gained 1.8 percent. Japanese financial markets were closed for a holiday.

[Associated Press; By SARA LEPRO]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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