By James Langton

(February 18 – 09:00 ET) – The U.S. Consumer Price Index came in a little lighter than expected this morning, 0.2% on both the headline and the core rates. Analysts expected 0.3% on the headline. The increase was rather moderate considering recent rises in tobacco and energy prices. The last piece of critical inflation data for the week was viewed rather positively by traders who immediately sent stock futures higher.

In Canada, the December merchandise trade balance was reported slightly lower than expected. It was predicted to remain above $3 billion, but came in at just $2.7 billion. Imports rose 3.2% in the month, thanks to the auto, construction and computer hardware industries. Exports only grew 1.4%, with transports, plastics and oil leading the way. Forestry sales to Asia were also strong. For 1999 the trade balance finished the year at almost $34 billion with exports growing twice as fast as imports in the year.

The favourable results in the U.S. CPI validates the optimism in European stocks this morning. Telecoms and techs are leading the way on expectations of moderate rate moves. Oils are down. London’s FTSE is up about 30 points to 6,240. The German DAX has added 29 points to 7,608. Only the French CAC 40 is down, off 24 points to 6,130.

The big news out of Europe is that Royal Bank of Canada in bidding for Greenwich NatWest, National Westminster Bank PLC’s global debt business. Bloomberg is reporting that RBC is the frontrunner in a deal that could cost around US$1 billion. Royal Bank of Scotland bought NatWest itself last week for US$33.2 billion but hasn’t decided if it wants to sell the business that NatWest proposed to sell to fend off a possible takeover. Greenwich NatWest recorded first half profit of £98 million, up from £54 million the year before.

Traders will also be watching CIBC which says that its profits will come in at least 25% higher than analyst expectations.

In other news pressure will be on Inco after it announces plans to shut its Newfoundland operations. Wi-LAN says it is planning a $32 million new issue.

Overnight in Asia markets were down. The Nikkei was nervous ahead of the U.S. CPI, as was Hong Kong. Although techs were strong there too. Nevertheless the Nikkei closed down just two points to 19,789. The Hang Seng dropped 382 points to 16,599.