By James Langton

(February 29 – 09:00 ET) – Traders get their first chance to react to yesterday’s federal budget this morning. The budget was so well leaked that there were few surprises. Some debt reduction, small spending increases and finally some tax reduction. RRSP investors, options holders and higher-income earners all received some help from the feds.

There’s some economic data out in the U.S. this morning, notably the National Association of Purchasing Managers’ Report at 10:00 ET. Inflation watchers will keep a close eye on the prices-paid component of the report. Statistics Canada has no major releases out today.

In Europe, trading is to the upside after Wall Street’s bounce with gains among retailers and auto stocks for a change. London’s FTSE is up 58 points to 6,157. The French CAC has added 93 points to 6,196, up 1.5%. France is the strongest market after an upbeat economic report saw French unemployment drop to a seven-year low. Germany’s DAX is up 76 points to 7,663.

Euro trading was a little loopy overnight on rumours that the European Central Bank is contemplating intervention to defend the currency. Some dovish comments from the Bank of England are also hitting the pound.

Merger news is coming fast and heavy today. Call it takeover Tuesday. The big deal is Pacific Century CyberWorks Ltd.’s US$38.1 billion takeover of Cable & Wireless HKT Ltd. Cap Gemini SA has agreed to snatch Ernst & Young’s consulting business for US$11.1 billion. Clear Channel Communications Inc., a U.S. radio broadcaster, is buying Livent’s bailout buddy SFX Entertainment Inc. for US$4.4 billion in stock and assumed debt. TeleCorp PCS Inc. is buying Tritel Inc. in a US$5.15 billion stock swap. to boost AT&T Corp.’s wireless business. Finally, Danone SA and Nabisco Holdings Corp. have agreed to a joint purchase of United Biscuits PLC for US$2 billion, splitting up the business among themselves.

In Asia, stocks closed up on the massive Cable & Wireless deal and Wall Street’s recovery. The Nikkei closed up 239 points to 19,959. The Hang Seng finished the day up 185 points to 17,169.

In other business news, miner-cum-online-broker Digital Gem is reporting a loss of $2.27 million in the third quarter, down from a loss of $1.12 million in the quarter last year. It blames the loss on investments in technology and personnel. Vitran Corp. is reporting fourth-quarter results of 11¢ per share, down from 21¢ last year. Beamscope Canada Inc. saw its loss improve from $1.42 in Q3 1998 to just a 7¢ loss in the quarter this year.