Markets seem to be deciding that a 25 basis-point rate cut isn’t so bad after all. While there was some disappointment that the rates didn’t drop 50 bps, yesterday, traders seem to be seeing it as a sign that profits will recover. Old economy stocks are leading the way back today.

Another good economic sign from the U.S. came today. The commerce department is reporting that last week’s jobless claims fell by 16,000 to 388,000. Economists were expecting to see the number rise, and for the second straight week they’ve been surprised by a sunny number.

In Canada, the industrial product and raw materials price indexes for May were reported. The Industrial Product Price Index grew 2.7% from May 2000to May 2001. ItÕs down from 2.9% in April. Petroleum and coal product prices rose 10.0%, without them the IPPI would have increased 2.2% instead of 2.7%.

Manufacturers paid 2.0% more for their raw materials in May than they did in May 2000, according to the Raw Materials Price Index. This marks a significant slowdown from April’s year-over-year gain of 7.5%. Mineral fuels provided the upward pressure, if they were excluded, the RMPI would have advanced 1.4% in May instead of 2.0%.

In Europe, at midday, stocks are bouncing on optimism following the U.S. rate cuts. Although markets opened weaker, after it was reported that Nokia Oyj plans to cut 1.7% of its workforce. But markets are now shaking that off. The FTSE is up 23 points to 5630. The CAC 40 has gained 28 points to 5085. The DAX is strongest, gaining 70 points to 5903.

Overnight in Asia, stocks were down as they felt disappointment in the modest rate action. The Nikkei shed 149 points to 12680. The Hang Seng dropped 176 points to 12828.

In M&A news, General Electric Co. is still working on winning approval for its proposed US$45 billion takeover of Honeywell International Inc. It has reportedly offered to sell about 20% of its aircraft-leasing unit in a new attempt to get the green light.

Societe Generale SA, France’s third-largest bank, is buying 60% of the last state-owned Czech bank, Komercni Banka AS, for US$1.02 billion.

In other news, Laidlaw Inc. announced that as part of its financial restructuring, the company and five of its subsidiary holding companies have filed for bankruptcy protection chapter 11 of the U.S. Bankruptcy Code in the U.S. The company and Laidlaw Investments Ltd. will be filing cases under the Canada Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario later today. None of the company’s operating units is included in the filings; they are not affected by today’s actions and will continue to carry on their businesses as usual.

Noranda Inc. has announced that it has signed a letter of agreement with Cambior Inc., of Montreal, and Minera S.A. of Bolivia, to acquire 100% of the El Pachon copper deposit, for US$28 million plus another US$2 million to be paid at the earliest of four years after closing of the transaction or making a production decision. It hopes to close the transaction in late August.

CGI Group Inc. has signed a letter of intent to acquire Larochelle Gratton, a Quebec- based IT consulting firm with operations in Montreal and Quebec City. It will pay $9.2 million in cash and shares for the firm, approximately 517,000 Class A subordinate shares of CGI will be issued at closing. The transaction is expected to be effective July 1.