TORONTO - A pledge by U.S. regulators to do whatever it takes to support the American financial system helped send stock markets higher Monday morning. Toronto's S&P/TSX composite index moved up 44.8 points to 7,994.8 after the financial sector led to a drop of 8.4 per cent last week. New York's Dow Jones industrials rose 66.6 points to 7,432.3. The index lost more than six per cent last week and blew past its recent low of Nov. 20, partly on fears the government will move to nationalize parts of the financial sector, in particular troubled banks Citigroup and Bank of America. The Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve jointly issued a statement saying they will do all they can to shore up the struggling banking system. The regulators also said they will launch a revamped program to inject fresh capital into financial institutions this week. The statement did not name any specific banks or respond to reports that the government was considering increasing its ownership of Citigroup Inc. Futures were already well into positive territory after the Wall Street Journal reported that Citigroup is negotiating with government officials to have the U.S. boost its stake in the bank to as much as 40 per cent. The Journal, which said Citigroup made the proposal to its regulators, noted that sources say executives would prefer to keep the government's stake closer to 25 per cent. "People don't want to see the banks nationalized but they know something has to be done for Citi," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York. "A lot of people were scared of full-fledged nationalization." In New York, Citigroup shares advanced 27 cents to US$2.22. The TSX Venture Exchange slipped 3.02 points to 889.88. Canadian investors also took in a major deal as Nova Chemicals Corp. (TSX:NCX) has agreed to be bought out for US$2.3 billion by Abu Dhabi-based International Petroleum Investment Co. Shares in Nova Chemicals plunged to a new low earlier this month as traders assessed heavy losses and looming financing deadlines in a deepening recession but soared $5.08 or 306 per cent to $6.74 in Monday trading. The Canadian dollar rose 0.15 cent to 80.19 cents US as retail sales in December fell 5.4 per cent in December to $33 billion - the largest monthly decline in over 15 years. Statistics Canada says three-quarters of the December retail decline was rooted in the automotive sector, without which retail sales fell 1.8 per cent. The Nasdaq composite index rose 3.95 points to 1,445.18 while the S&P 500 index rose 6.75 points to 776.8. Investors will also be watching a summit at the White House, where President Barack Obama is bringing together dozens of advisers and adversaries to discuss how to curb a burgeoning federal deficit laden with Social Security, Medicare and Medicaid obligations. The summit is the first meeting toward a strategy to address America's long-term fiscal health and comes as Obama prepares ambitious plans to cut the federal deficit by half within four years. The TSX financial sector, which lost over 14 per cent last week, rose 1.4 per cent . Investors are also braced for earnings reports from the big banks later in the week. Canada's big banks are preparing to report their first-quarter earnings for 2009 this week. TD Bank (TSX:TD), which reports Wednesday, was ahead 53 cents to $33.78. Manulife Financial moved ahead 43 cents to $13.55. Improved confidence in financial markets helped boost oil prices as the April crude contract on the New York Mercantile Exchange rose $1.18 to US$41.21 a barrel. The energy sector rose 1.5 per cent as EnCana Corp. (TSX:ECA) gained 86 cents to $49.13 and Suncor Inc. (TSX:SU) 50 cents to $22.65. The base metals sector on the TSX gained two per cent as the price of copper rose six cents to US$1.47 a pound. Teck Cominco Ltd. (TSX:TCK.B) moved up 13 cents to $3.95. The gold sector was the leading decliner, down almost four per cent as the April bullion contract on the New York Mercantile Exchange dipped $16.70 to US$985.50 after closing above US$1,000 on Friday. Barrick Gold Corp. (TSX:ABX) gave back $1.86 to $44.22. The FTSE 100 index of leading British shares was up 0.8 per cent, while Germany's DAX and the Paris CAC 40 rose 1.4 per cent. In Asia, Japan's Nikkei 225 stock average recouped some of its losses to end down just 40.22 points, 0.5 per cent, at 7,376.16. Japan's top business daily reported Monday that Toyota, the world's biggest automaker, is preparing to set a 2009 global vehicle production target of about 6.5 million vehicles, the lowest in six years. Hong Kong's Hang Seng closed up 475.93 points, or 3.8 per cent, at 13,175.1.

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