Some long-awaited upbeat news from Nortel Networks Corp. boosted Toronto markets, while U.S. markets drifted into negative territory Tuesday morning.

As of midday, Toronto’s S&P/TSX composite index was 26.97 points or 0.32% higher at 8449.2,while the TSX Venture Exchange was down 13.25 points or 0.84% to 1563.79.

ON Wall Street, On Wall Street, the Dow industrials dipped 4.57 points or 0.04% to 10233.65. The Nasdaq was down 3.27 points or 0.17% at 1933.65, while the S&P 500 index was slipped 1.19 point or 0.11% at 1113.16.

The Canadian dollar was off more than 0.44 of a cent to US75.42¢ after Statistics Canada reported a narrowing of Canada’s trade surplus in May and a smaller U.S. trade deficit. Imports hit a record level of $31.6 billion, up 7.8% from April and the biggest monthly gain since January 1997. Exports were up in May by 1.3% to $36.8 billion.

The Canadian currency fell as the U.S. dollar strengthened against other currencies after the U.S. Commerce Department said the U.S. trade deficit narrowed to $46 billion in May, an improvement brought about as U.S. exports posted their best month on record.

Beleaguered Nortel Networks kick-started the Toronto market as its shares climbed 53¢ cents or 9.5% to $6.10 after CEO Bill Owens said the company is focusing on cost controls amid an investigation into the company’s finances that led to the firing of top executives. More than 21.4 million shares had traded hands by noon Tuesday.

“It has become clear that we will need to put into place an improved cost structure to drive financial performance,” Owens said Tuesday in a regular report on the communications equipment company’s financial probe, which will slash 2003 earnings in half. “The company will take the necessary steps to ensure that our operations and our investments are focused and that we are creating and leveraging our competitive advantages,” he said.

Nortel’s surge pulled up other tech stocks as well; the TSAX technology sub-index was up 3.3% at noon. Financials were also up by 0.44%, as were industrials (0.6%) and consumer staples (0.5%). Gold shares were off 2% with the price of gold losing US$7.10 to US$400.80 an ounce in New York.

On Tuesday morning, Merrill Lynch & Co. reported a 10.3% surge in second-quarter profits. The New York-based brokerage earned US$1.08 billion or US$1.06 per share, in the three months ending June 25, up from US$977 million, or US$1 per share, in the same period one year ago. Analysts polled by Thomson First Call had expected earnings of $1.09 per share but its shares recovered from earlier losses to trade 25 cents higher to $51.72 US.

Investors are looking ahead to an earnings report from chip giant Intel after the close and are also looking to reports this week from heavyweights including Apple Computer Inc, Bank of America and CanWest Global Communications.

IBM supported the Dow as its shares climbed $1.03 to $85.98 after Morgan Stanley boosted its recommendation on the stock to “overweight” from “equal weight.”

Overseas, Tokyo’s Nikkei Stock Average of 225 issues rose 26.34 points, or 0.23%, to 11,608.62. In Hong Kong, the key Hang Seng Index fell 112.68 points, or 0.92%, to 12,078.33.

London’s FTSE 100 index was up 3.4 points at 4,363.4. Frankfurt’s DAX 30 was up 0.43% and the Paris CAC 40 edged up 0.44%.