By James Langton

(July 13 – 09:00 ET) – The Canadian CPI for June came in generally above expectations, rising to a 2.9% annual rate on the headline. This was up sharply from from May’s 2.4%, and ahead of the expected rise to 2.7%. Higher gas prices were the main reason for the jump, with mortgage interest payment increases factoring in, too. The core rate remained unchanged at 1.4%, and that’s the number the Bank of Canada is keying on. Economists still expect the bank to stand pat on these numbers.

Yesterday’s speech from Fed chairman Alan Greenspan did nothing to spook markets overnight. In the U.S. jobless claims for last week were reported up 27,000, ahead of expectations of 6,000. This is generally good for markets. Import prices were reported up 0.8% last month, although the non-energy import prices were unchanged.

In Europe stocks are mixed this morning, with insurers and media stocks up, oils are sliding. London’s FTSE is down 32 points to 6,486. In France the CAC 40 is up three to 6,539. Germany’s DAX is strongest, up 23 points to 7,089.

The brokerages are again at the top of the news slate with J.P. Morgan & Co. reporting second-quarter earnings up unexpectedly by 7.5%, driven by gains in investment banking and trading. Merger speculation continues in this area. Bloomberg is reporting that UBS AG talked seriously with Lehman Brothers Holdings Inc. before yesterday’s deal for PaineWebber Group Inc.

In other M&A news, Diageo Plc is in talks to merge its Pillsbury food unit with General Mills Inc.

Crude oil prices are rising again today, back above US$30 a barrel, since OPEC has failed to back Saudi Arabia’s proposal to increase production.

In Asia stocks declined. The Nikkei dropped 305 points to 17,036. The Hang Seng slid 103 points to 17,449.

In other business news this morning, Nortel Networks Corp. is negotiating a $100 million long-term supply deal worth more than $100 million.

Lions Gate Entertainment Corp. is reporting a 17¢ per share loss for its fiscal year ended March 31, up from a 58¢ loss in the previous year.

Geac Computer Corp. announced today its financial results for the year ended April 30, net income was 79¢ per fully diluted share compared to a loss of $1.80 per share last year.

Geac also announced that it has reached an agreement in principle to sell its SmartStream Banking Systems business for approximately $160 million in cash to an investor group led by 3i, a European venture capital firm.