By James langton

(February 24 – 13:00 ET) – Traders opened markets enthusiastically this morning on better-than-expected inflation news, but Wall Street nervousness soon spread north, knocking stocks back.

At noon the TSE 300 was down 44 points to 9,271. The index was up above 9,400 on the open this morning. Volume is strong at 135.8 million shares, with a 7:6 edge for sellers over buyers. Market breadth is also negative, with decliners outrunning advancers 11:9.

The big losers are the golds, miners, media and utilities. Investors continue to rotate out of these core stocks and into software and biotech plays. Consumer products are leading the buying, followed by the merger-happy paper stocks.

St. Laurent Paper is up 7% on 6.5 million shares after its announced that it would be acquired by U.S.-based Smurfit-Stone. The other big takeover target, Newbridge Networks, is trading actively too, up 50¢ on 2.1 million shares. Apart from these stocks the volume is largely in the hands of penny stock players. For example Vengold is down 18% on 4 million shares, as some profit-takers flee.

Auto stocks are headed down this morning, with the selling felt most acutely by Ballard Power which is off 8%. BCE Inc. and Nortel Networks Corp. are leading on the downside for the utilities and industrials. Northstar Energy is the big loser for the oil stocks. Seagram is down more than 4%, slugging the media sector.

On the upside traders are back buying JDS Uniphase, Research in Motion, Sierra Wireless and Certicom. Tech plays such as Open Text, Tundra Semiconductor and Descartes Systems are also seeing their fair share of buyers driving prices higher.

The small caps are down for a change this morning. The CDNX index is off 12.5 points to 3,569. Volume is average at 53 million shares. Both technology and mining stocks are weighing on the index. Only oils are showing any resistance on the CDNX. Savanna Resources Ltd remains the hottets trade, down 10% on 3.7 million shares.

Wall Street nerves have been the big trading factor today, throwing cold water on rallies elsewhere. Stocks opened higher here too, but the cyclicals soon started selling aggressively. The Dow dropped below 10,000 for the first time since its October correction. It hasn’t closed below 10,000 since last April. But it’s been a day of divergent landmarks in New York, while the Dow was dumping Nasdaq was heading in the other direction, peeking above 4,600 for the first time ever. The Dow bounced back above 10,000, and now sits down 198 points at 10,028. Nasdaq has given up earlier gais to trade down seven at 4,542. The S&P is off 19 points to 1,341.

In other business news, WestJet Airlines has announced its results for the year ended December 31, reporting earnings per share up to 58¢ from 28¢ per share in the period a year ago. Stackpole is reporting a fourth quarter loss of 75¢, down from last year’s 4¢ per share profit. Bentall Corp earned 22¢ per share in its fourth quarter, up from 10¢ last year.