North American stocks are expected to open flat following the European Union’s decision to impose a record fine against Microsoft, and yesterday’s conservative budget from Ottawa.

EU regulators fined Microsoft 497 million euros and slapped tough sanctions on the software giant for abusing its power in markets for software that links computers and plays music and video clips. The EU ordered Microsoft to reveal code from its dominant Windows desktop operating systems to help rivals create competing server software and to offer a version of Windows without its digital music and video player.

Midday in Europe, London’s FTSE100 is down 0.4% at 4,302.2, while in Paris the CAC40 index is 0.9% lower at 3,509.57. Frankfurt’s Xetra Dax Index is down 0.8% at 3698.41.

In economic news, the U.S. Commerce Department reported this morning that durable-goods demand increased 2.5% to $183.8 billion in February. That was an improvement from the revised 2.7% drop registered in January and represented the largest increase since October. February’s performance was better than economists were expecting.

Statistics Canada said today that Canada’s net liability to foreign residents fell to $205.9 billion during the fourth quarter of 2003, its lowest quarterly level in a year. The decline was driven by increases in Canadian direct investment abroad.

Asian markets closed higher overnight, with Japan and Hong Kong investors snapping up blue chip stocks.

Tokyo stocks rebounded as a positive economic assessment by the Standard & Poor’s ratings agency prompted investors to buy in banks, retailers and property developers. The Nikkei Stock Average of 225 issues closed up 83.9 points at 11,364.99.

In Hong Kong, investors sought bargains in big property developers and telecom giants as worries over political instability in Taiwan eased. The Hang Seng rose 89.77 points to 12,678.13.

North American stock markets slipped Tuesday, with the Toronto market drifting down on resource-sector declines and muted activity ahead of the federal budget speech.

The S&P/TSX composite index moved 3.96 points lower to 8,474.56. The junior TSX Venture Exchange dipped 12.76 points to 1,854.16.

Petro-Canada shares fell $1.05 to $55.85 after the government announced it will sell its 19% stake in the former Crown corporation.

On Wall Street, the Dow Jones industrial average slipped 1.11 points lower to 10,063.64. The Nasdaq composite index slid 8.10 to 1,901.80; the S&P 500 index declined 1.45 points to 1,093.95.

The Canadian dollar closed up 0.06¢ at US75.05¢ after StatsCan reported the composite leading index rose 0.4% in February, led by manufacturing.