By James Langton

(December 15 – 09:00 ET) – Stocks appear headed south this morning. Microsoft Corp. cut its sales and earnings estimates last night and is leading Wall Street on a downgrade parade. Cisco Systems Inc. is also dropping following the resignation of its worldwide operations chief.

On the economic front, the U.S. Consumer Price Index came in up 0.2% on the headline. The core rate, which excludes food and energy, is up 0.3%. That’s a little more than expected. These numbers shouldn’t be enough to push analysts off their expectation that the U.S. Federal Reserve Board will move off its tightening bias next week. On the other hand, influential Washington Post columnist John Berry is suggesting in today’s column that the Fed is unlikely to cut rates.

The only number out in Canada is the Composite Index. The leading indicator slowed, rising just 0.3% in November. It rose 0.7% growth in both September and October. Statistics Canada says external demand continued to weaken while the stock market continued to tumble.

In Europe, stocks are down led by the techs. The FTSE in London is down 32 points to 6231. The Paris CAC 40 has dropped 64 points to 5842. The German DAX is down 82 ticks to 6388.

In M&A news, Abbott Laboratories is buying BASF AG’s drug unit for US$6.9 billion in cash.

Asian markets were brutalized overnight, too. The Nikkei dropped 375 points to close the week at 14552. The Hang Seng fell harder, losing 521 points to 14975.

In other business news, MDS Inc. reported full year net income of $1.01 per share before goodwill charges, compared with 78¢ in 1999.

Mitel Corp. says it will sell its communications systems division for $350 million in cash, and that its semiconductor orders will by down 10% in the third-quarter from the second-quarter.

TrizecHahn Corp has hired Christopher Mackenzie as its new chief executive, effective January 1. Peter Munk remains chairman and Gregory Wilkins will remain president and chief operating officer.