TORONTO - Wall Street stock index futures indicated a positive open and overseas markets were generally higher as Bank of America exceeded expectations and a big drug industry takeover deal heartened investors.

Bank of America's second-quarter profit fell 41 per cent from a year ago as loan quality continued to deteriorate. But its profit of $3.41 billion or 72 cents per share topped market expectations of 53 cents per share. And the second-largest bank in the United States said its $2.5-billion purchase of troubled Countrywide Financial Corp. will add to its profits this year.

That follows a revival in the U.S. financial sector last week as other major institutions, notably JPMorgan Chase, beat Wall Street analyst projections.

Roche Holding of Switzerland, meanwhile, is proposing to buy the rest of Genentech Inc. for US$43.7 billion.

Elsewhere, Yahoo Inc. announced a settlement with investor Carl Icahn to avert a battle for control of the company. Icahn, who is pressing for a sale of Yahoo, likely to Microsoft, will join the Yahoo board along with two of his associates.

In Canadian corporate news, Daylight Resources Trust (TSX:DAY.UN) bowed out of the bidding for Cadence Energy Inc. (TSX:CDS). That leaves Barrick Gold Corp. (TSX:ABC) to prevail with its cash offer of $6.75 per share, a total of $410 million, while Daylight pockets a $9-million break fee.

Ahead of a heavy week of corporate profit reports, U.S. Treasury Secretary Henry Paulson offered an assurance that the banking system is sound but cautioned that anxious times will continue: "I think it's going to be months that we're working our way through this period - clearly months."

That followed a week in which Wall Street made impressive gains, with the Dow Jones industrial average gaining 3.6 after rising 277 points Wednesday, 107 Thursday and 50 on Friday.

Toronto's S&P/TSX composite index, meanwhile, declined 1.4 per cent on the week to end at 13,515.96, and is down by just over 10 per cent from its high of 15,073 a month ago due to weakening commodity stocks.

The Canadian dollar opened at 99.57 cents US, up 0.14 cent.

Oil prices were higher Monday, with the near-month contract for light sweet crude up $1.67 to US$130.55 a barrel on the New York Mercantile Exchange.

Last week, Nymex crude fell more than US$18 from its record of $147.27 on July 11, settling Friday at $128.88 on Friday, down 41 cents.

Prices rose Monday on an increase in anxiety surrounding Iran and worries that Tropical Storm Dolly may disrupt oil operations in the Gulf of Mexico.

"Over the next 12 to 18 months we expect prices to fall on demand-side adjustments to the high prices," said David Moore, a commodity strategist with Commonwealth Bank of Australia in Sydney.

"But there are certainly chances for short-term spikes with issues such as Iran or storms."

Asian stock markets were generally higher, with gains of three per cent in both the Hong Kong and Shanghai main indexes, although Tokyo's Nikkei index declined 0.7 per cent.

The FTSE 100 index was up 0.6 per cent early in the afternoon in London, while the German DAX advanced 1.1 per cent and the Paris CAC-40 added almost one per cent.

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