By James Langton

(May 4 – 13:00 ET) – Tech strength is all that’s supporting a generally weak market today. At midday the TSE 300 composite index is up 83 points to 9374, although it is sliding off earlier highs. Volume is light at just 70.3 million shares. Traders are nervous about inflation. Many appear to be sitting on the sidelines ahead of tomorrow’s employment data.

Markets were hurt by a report released this morning that U.S. productivity is up, but less than expected. Combined with recent reports indicating a tight labour market, there is plenty of inspiration for traders to be worried about inflation and ensuing rate hikes.

The volume is about 2 to 1 in favour of buyers, thanks to massive buying in a few select stocks. Yet the split between advancers and decliners is almost neutral.

Only industrials, golds and real estate are up. Everything else is in the red, led by the miners, transports and integrated oils.

Nortel Networks is leading the way up 4% on more than 3 million shares. Newbridge is one of the hottest traders, up more than 8% on 1.35 million shares. Stocks such as BCE, Ballard Power and AT&T are up. Oxford Properties is leading the real estate sector higher. Transcanada Pipelines is up after announcing a big asset sale.

Financials are down. But the fund companies are up sharply after a newspaper article spurred speculation about a Mackenzie-Trimark combination. Both stocks are up heavily on this speculation. The hammer among the investment bankers in the fund area, Griffiths McBurney, is the big buyer of both stocks.

On the downside, some of the hot techs are leading the way. JDS Uniphase, 724 Solutions, Celestica and Research in Motion are all down. Laidlaw preferreds are down sharply, although the common stock is up.

In New York volume is quiet and stocks have been gyrating all morning. At midday they are heading south. The Dow Jones industrial average is down 68 points to 10411. NASDAQ has slipped 23 points to 3684. The S&P is off eight points to 1407.

The small caps are more or less unchanged at midday. The CDNX index has dropped two points to 3532 on decent volume of 18.9 million shares. Techs and energy stocks are up, miners are flat. Bricol Capital Corp. is the hottest trade up 230% to 33¢ on 2.4 million shares.