By James Langton

(July 31 – 09:00 ET) – Canadian gross domestic product rose 0.6% in May, ahead of an expected 0.4% rise. Statistics Canada says manufacturing output was led by automotive production and electronic goods fabrication. Wholesaling, transportation activity and electricity output also rose. Retailing slumped though. High technology industries such as electrical and electronic products, telecommunication carriers, and computer services, continued to outpace the rest of the economy, collectively rising 2% in May. Compared with May 1999, the output of this group of industries grew 21%, while the rest of the economy grew 3.8%.

In M&A news, CanWest is acquiring Hollinger’s Canadian metropolitan newspapers, magazines, Internet assets and most of the community newspapers, and a 50% interest in the National Post, in a deal worth $3.5 billion.

CanWest will pay $2.2 billion in cash and approximately $600 million in the form of 24.3 million non-voting shares valued at $25 a share and 2.7 million multiple voting preferred shares. Hollinger will take back a $700 million, 10-year subordinated debenture.

CanWest believes that post-2000 efficiencies will result in annual savings of between $50 and $150 million, which should make the transaction accretive to earnings by the end of fiscal 2002. Hollinger acquires a 15% share and just under a 6% voting interest in CanWest. Two Hollinger executives, including Conrad Black, will join CanWest’s board of directors.

In the U.S., the Chicago purchasing managers report, due at 10:00 ET, is the biggest release of the day.

In Europe this morning stocks are mixed, led by strong earnings in BMW and HSBC, and mergers and acquistions news. The FTSE is down 41 points to 6,294. The CAC 40 is up eight points to 6,424 though, and the DAX has gained 54 points to 7,182.

In other M&A news, FPL Group Inc., Florida’s largest power company, is buying New Orleans-based Entergy Corp. for US$13.9 billion in stock and assumed debt to create the largest electric utility in the United States. Pearson plc is buying National Computer Systems Inc. for US$2.5 billion in cash.

In Asia stocks closed down on the heels of the Nasdaq drop last Friday. The Nikkei finished down 111 points to 15,727. The Hang Seng slid 343 points to 16,840.

In other news, Enbridge Inc. and Global Thermoelectric Inc. have agreed to jointly develop a natural gas powered fuel cell that could be used to supply electricity and heating to individual houses. Enbridge will buy $25 million of Global preferred shares.

IAMGOLD is reporting net income of US$5 million for the second quarter of 2000 compared to US$3 million in 1999. AnorMED Inc. reported a net loss of $2.9 million or 13¢ a common share for its first fiscal quarter ended June 30, compared with a net loss of 10¢ a share last year.