Stock Futures Higher as Global Markets Embrace Abu Dhabi’s Help for Dubai

07:17 AM Eastern Standard Time, 12/14/2009 (MidnightTrader) — U.S. stock futures are higher, following the cue of global markets that reacted positively to word Abu Dhabi has given fellow emirate Dubai $10 billion in financing.

The loan will be used to pay part of the debt held by state-owned conglomerate Dubai World and its property unit Nakheel. The news sparked a rally in Dubai stocks, which surged over 10% Monday. European stock markets also posted gains, led by banking shares. Equity markets in Hong Kong, Shanghai and Sydney all reversed direction to finish higher following the Dubai news, MarketWatch and other new outlets reported.

At last check, S&P 500 futures are up nearly 5 points, with DJIA futures are up over 50 points and Nasdaq 100 futures advancing 8 points. Stocks finished higher Friday after a better-than-expected retail sales report.

Global financial shares are gaining in the wake of the Dubai news.

In pre-market action, Citi (C) is an early decliner as official details of its TARP buyback plans emerge. The stock had gained in recent days amid speculation for such an announcement.

Citi has reached an agreement with the U.S. government and its regulators to repay U.S. taxpayers for the $20 billion the government holds in TARP trust preferred securities and to terminate the loss-sharing agreement with the government.

Citi will immediately issue $20.5 billion of capital and debt, comprised of: $17 billion of common stock, with an over-allotment option of $2.55 billion; and $3.5 billion of tangible equity units (consisting of approximately $2.8 billion of prepaid common stock purchase contracts (recorded as equity) and approximately $0.7 billion of subordinated notes (recorded as debt).

In connection with Citi’s offering, the U.S. Treasury (UST) will sell up to $5 billion of the common stock it holds in a concurrent secondary offering. After the secondary offering, the UST is subject to a 45-day “lock-up” period. The Treasury has also announced that it plans to sell the remainder of its shares in an orderly fashion over the next 6-12 months.

In addition, Citi has decided to issue in January 2010 $1.7 billion of common stock equivalents to employees in lieu of cash they would have otherwise received.

The repayment will result in an approximate $8 billion pre-tax loss ($5.1 billion after tax).

Platinum and silver futures climbed, though gold futures edged up just $1 an ounce, and oil futures were trading below $70 a barrel.

The dollar, retreated from a two-month high, falling against both the Japanese yen and the euro, with the dollar index falling 0.3%.

On the economic docket, no reports Monday, though a busy schedule the rest of the week, including inflation data, housing figures and factory reports.