North American stocks look set to open sharply lower Thursday, mirroring declines in Asia and Europe, amid concern that China will raise interest rates. Meanwhile, the deluge of corporate earnings reports continues.

On Wednesday both the S&P/TSX composite index and the Dow Jones industrial average closed at record highs.

A drop in Chinese stock prices rattled markets across Asia on Thursday — and threatened to undercut prices in Europe and the U.S. as well. The Shanghai Composite Index buckled 7% before finishing with a 4.5% loss as the government announced higher than expected first-quarter economic growth of 11.1%, plus inflation and investment numbers that suggest the economy is growing too quickly.

Japan’s Nikkei 225 fell 1.7% and Hong Kong’s Hang Seng Index closed down 2.3%.

In today’s economic news, Canada’s annual inflation rate picked up steam in March, rising to 2.3% from 2% in February.

Separately, Statistics Canada reported that wholesaling activity picked up in February with higher sales of food and personal and household products accounting for much of the increase.

The Canadian dollar opened at 88.83 cents US, up 0.17 of a cent.

The Canadian dollar opened at US88.83¢, up 0.17 of a cent.

In today’s earnings news, Merrill Lynch’s first-quarter net income soared to US$2.16 billion as a big year-earlier stock-compensation charge hurt earnings in that period.

Bank of America posted a 5.4% rise in first-quarter profit, helped by robust equity markets and the boom in mergers and acquisitions.

Nokia’s first-quarter net profit declined by 6.6%, with average handset selling prices slipping due to strong sales in emerging markets.

Altria Group reported a 21% drop in first-quarter profit on a year-earlier tax gain and lower earnings from Kraft Foods, which Altria spun off at the end of the quarter. The tobacco giant also boosted its full-year earnings forecast.

Late Wednesday, eBay reported a 52% jump in quarterly net income to US$377.2 million, or 27 cents a share.

E-Trade Financial cut its 2007 earnings forecast after Wednesdayh’s close as customer trading activity dropped in the recent turbulent market.

Crude-oil prices rose 19¢ to US$64.57 a barrel, a day after a weekly government energy report indicated that crude stocks had declined.

A strong showing by financial issues boosted Toronto stocks to another record high close on Wednesday.

The S&P/TSX composite index climbed 54.01 points to 13,711.96.

The junior S&P/TSX Venture composite idex inched up 0.33 of a point to 3,335.19.

In New York, the Dow Jones industrial average also closed at a new record high. The Dow jumped 30.8 points to finish at 12,803.84.

The Nasdaq composite index lost 6.45 points in the wake of some earnings disappointments to 2,510.5 while the S&P 500 index moved 1.02 points higher to 1,472.5.