The latest inflation report shows that prices are weakening. Statistics Canada reported Tuesday that the Consumer Price Index rose 2.6% from June 2002 to June 2003. This 12-month change constitutes the weakest increase since September 2002.

There were monthly increases of only 0.1% in both May and June 2003.

The largest part of the increase has been the bump natural gas, +48.3%, as well as from the 22.6% jump in automotive vehicle insurance premiums. The CPI excluding energy rose even less — just 2.2% from June 2002 to June 2003.

The Canadian dollar has slipped from US71.24¢US to US71.07¢ since the inflation report came out. Some economists are saying that the Bank of Canada is likely to lower interest rates another 50 basis points this year, resulting in a dollar that will dip below US70¢

Meanwhile, investors are absorbed in the second week of earnings season. Alcan started the day’s reporting by announcing that had a net loss of $89 million, compared with a $71 million profit in the year-ago quarter. Excluding a $113 million loss on discontinued operations, income from continuing operations was US$24 million, down from $72 million. Alcan says its results fells due to flat aluminum prices. The company also took a $146-million after-tax hit from currency translations on the balance sheet.

In addition to Alcan, Canadian companies issuing results today include Inco, Stelco, Canadian National Railway, WestJet, the Summit Real Estate Investment Trust, the Legacy Hotels REIT and the Fording Canadian Coal Trust.

Wall Street index futures are up somewhat pointing to a positive open for equity markets.

In Europe, London’s FTSE 100 index is showing a slight gain. It’s up 4.3 points to 4,048.6. Frankfurt’s DAX is down 0.8%. Paris’s CAC40 is also down, dropping 0.6% in morning trading.

Asian stock markets closed lower in Tuesday trading. Japan’s Nikkei lost 41.76 points to 9,485.97, pulled down by technology issues. Hong Kong’s Hang Seng index fell 94.15 points to 10,008.71.

In business news, Lehman Brothers Holdings Inc. will acquire Neuberger Berman Inc. in a cash-and-stock deal valued at US$2.63 billion.

The acquisition would propel Lehman Brothers Holdings beyond its traditional trading and underwriting of bonds, setting it up to compete more aggressively with Wall Street rivals such as Merrill Lynch & Co. and Morgan Stanley.

The Neuberger acquisition represents a reversal of Lehman’s strategy of distancing itself from individual investors, which represents a segment of Neuberger’s business.