North American markets may open higher Tuesday, with oil prices continuing to retreat and the Bank of Canada raising interest rates as expected.

Light sweet crude for November delivery was down US60¢ at $US53.07 in trading in New York.

Here at home, the central bank today raised its key interest rate 25 basis points to 2.50% from 2.25% — meeting analysts expectations.

South of the border, the U.S. Labor Department said the consumer-price index rose 0.2% last month, the highest rate since June. The core index — which excludes volatile food and energy items — rose 0.3%, the fastest pace since April.

In year-on-year terms, however, the CPI was up 2.5%, down from an increase of 2.8% in August.

The increase in the core index was larger than the 0.2% gain that analysts had been expecting, although the overall increase matched expectations

Meanwhile, U.S. home construction fell much more than expected during September, but permits for future building posted a surprise increase.

The Commerce Department said housing starts decreased 6.0% to a seasonally adjusted 1.898 million annual rate. Economists had forecast housing starts would drop by 2.8% to a 1.945 million annual rate.

Building permits, seen as an indicator of future activity in the housing sector, increased by 1.8% to a 2.005 million annual rate. Forecasters had expected a 1.5% dip.

Toronto stocks reversed course Monday afternoon to close flat, while U.S. markets rallied as oil prices fell sharply. November crude futures plunged US$1.26 a barrel to US$53.67 in New York on indications of declining demand.

The S&P/TSX composite index closed down 0.03 of a point at 8,788.90 on volume of 237 million shares.

The junior S&P/TSX Venture composite index slipped 4.61 to 1,658.11.

In New York, the sharp drop in oil prices gave Wall Street a modest relief rally. The Dow Jones industrial average rose 22.94 or 0.23% to 9,945.32.

The tech-heavy Nasdaq composite index jumped 25.02 or 1.31% to 1,936.52. Tech stocks rose as investors waxed optimistic on earnings from International Business Machines Corp., which reported earnings after the session. IBM, which beat Wall Street estimates by US3¢ per share before a one-time charge, closed at US$85.82, up US$1.07.

The broader S&P 500 index was up 5.82 or 0.53% at 1,114.02.