By James Langton

(May 4 – 09:00 ET) – The U.S. market received some negative economic news this morning. Productivity was reported up 2.4%, less than was expected. Meanwhile evidence of tight labour markets continues, with unit labour costs up 1.8% and jobless claims rising 303,000 last week.

These numbers pushed traders toward the conclusion that inflation is building, though most wait to hear U.S. Federal Reserve Board Chairman Alan Greenpan’s speech this morning on the finance industry. They will be listening for rate hike clues.

In the meantime, stocks were most up this morning in early European trading. London’s FTSE added two points to 6187. France’s CAC 40 is up 13 points to 6,448. Germany’s DAX was flat at 7,377 points.

In business news Allianz AG and Munich Re are going to unravel their cross holdings in one another, selling US$7.1 billion worth of stock. Grupo Financiero Banamex-Accival SA, Mexico’s largest bank, made an unsolicited US$2.8 billion stock bid for Grupo Bancomer. Royal Dutch/Shell Group saw its first-quarter profit more than double on cost-cutting and higher oil prices.

Again in Asia, Japan is closed, but stocks dropped in Hong Kong. The Hang Seng closed down 263 points to 15314.

Seagram reported first quarter cash flow in line with expectations and revenue growing faster than expected, although the net loss widened.

TransCanada PipeLines Ltd. is selling its 17.5% interest in Oleoducto Central S.A. and its 50% interest in CIT Colombiana S.A. to Enbridge Inc. for US$117 million. The sale is expected to close by the third quarter of 2000, pending regulatory approval.