By James Langton

(February 14 – 13:00 ET) – With little news to trade on this morning, the market is latching on to rumours to drive the action.

As a result of a rumour circulating about Nortel Networks, the TSE 300 is down 95 points to 8,847. Volume is a little soft at 75.8 million shares, favouring sellers four to three. Losers outnumber the winners about five to three.

The major source of weakness is Nortel, down about 4% at midday on very heavy volume of 14.4 million shares. Rumours that JDS Uniphase would be dumping its stake in Nortel immediately is hitting the stock hard, pushing it to a new 52-week low.

JDS acquired the stake from the recent sale of a plant to Nortel, and has denied the rumours. Nevertheless, the TSE’s industrial sub-index is down 2.7%.

Consumer stocks, financials and media plays are also weak today. Upside moves are moderate, led by the conglomerates and paper plays, still enjoying the prospect of the CP breakup.

CP is up another 3% today in heavy trading, as analysts begin upgrading their targets for the firm. Subsidiary PanCanadian Petroleum is up 6.75%, too.

This news, along with a slew of M&A action in the oil and gas sector, is boosting names such as Gulf Canada, Superior Propane, Northstar Energy, Pioneer Natural Resources, and Veritas.

Earnings announcements are hitting the market today. Rogers Communications is down more than 8% in active trading as traders continue to punish the stock for yesterday’s poor results.

TD Waterhouse reported a lower profit this morning, disappointing the Street, but also sending bank stocks down. The poor results for TWE are seen as a harbinger for bank earnings which are starting this week, too. TD Bank is down 2.7%, and Royal Bank is off 1.3%, leading bank stocks south.

There’s also weakness among the techs, where Alcatel, Open Text, PRI Automation, Pivotal, Sierra Wireless, Descartes Systems and Angiotech are all down.

In New York, uncertainty over the direction of interest rates and the depth of the slowdown as traders grinding the market lower without much conviction on either side. The Dow Jones industrial average is off 75 points to 10,828. Bargain hunters are pushing the Nasdaq composite index up nine points to 2,442. The S&P 500 is off seven points to 1,311.

The CDNX is weak, too, dropping 13 points to 3,205. Volume is on the weak side at 19.4 million shares. Techs are leading the way down, with oils down and mines up. Genoil Inc is the top trader up more than 8% to 13¢ on 3.2 million shares.