Falling energy shares plus some negative news about Nortel Networks Corp. combined to depress Canadian markets, while their U.S. counterparts were buoyed by a drop in consumer prices.

At midday, the Toronto Stock Exchange’s S&P/TSX composite index was down 11.57 points or 0.14% at 8229.92 on volume of 105.9 million shares.
The TSX Venture Exchange was also down, off 3.32 points or 0.22% to 1477.68.

On Wall Street, the Dow Jones industrial average rose 20.86, or 0.21% to 9975.41. The Dow had pushed past the 10,000 mark earlier in the session; the last time the Dow closed above 10,000 was Aug. 4. Broader stock indicators were modestly higher. The Standard & Poor’s 500 index was up 2.46, or 0.23% at 1081.8, and the Nasdaq composite index gained 12.91 points or 0.72% to 1795.75.

The Canadian dollar was off 0.01 of a cent to US76.48¢.

In Toronto, energy stocks were trading lower as oil prices were down, at least initially, for the second day in a row. A barrel of light crude oil was quoted at US$45.75, down 30¢, on the New York Mercantile Exchange. However, Russian oil giant Yukos’ continuing tax problems sent oil futures higher in late morning trading. A barrel of light crude was quoted at US$46.20, up 15¢.

The TSX energy sub-group was off 1.58%, with Suncor Energy (off $1.20 or 3.23% to $35.99 on heavy volume) among the biggest losers.

Technology stocks as a whole were up (0.71%), but were held back by Nortel, whose shares were off 14¢ or 3.12% to $4.34 on volume of more than 7.7 million shares. The stock was hit by more bad news late Monday that the RCMP is opening a criminal investigation into the financial accounting at Canada’s largest high-tech company. The U.S. Attorney’s office in Dallas has also subpoenaed documents from the company as part of a criminal investigation in the United States and securities regulators in both countries are investigating the company’s finances. Nortel has also been hit with numerous class-action suits. The probes come as the telecommunications equipment manufacturer prepares to release preliminary first- and second-quarter results on Thursday.

In New York, stocks opened higher after two separate reports showed inflationary pressure was held in check in July and U.S. housing starts rebounded sharply in the same month.

With gasoline prices falling to eight-month lows, the Consumer Price Index registered a small drop in July, giving consumers a respite from soaring energy prices. With consumer spending one of the main drivers of the economy, the news cheered investors who have been concerned that higher oil prices could spur inflation. According to the Labor Department, the CPI fell 0.1% in July, the first drop in prices since November and a large shift from the price gains in May and June. Without food and energy costs factored in, the CPI rose 0.1%, less than Wall Street had forecast.

Housing construction also saw better-than-expected gains, with the Commerce Department reporting an 8.3% rise in home and apartment construction in July, more than making up for the 7.7% drop in June.

In overseas markets, London’s FTSE 100 was up 10.4 points at 4360.6. Frankfurt’s DAX 30 gained 0.37%, while the Paris CAC 40 was up 0.5%.

Asian stock markets closed generally higher, with prices rising in Tokyo and Hong Kong on bargain hunting. Tokyo’s Nikkei Stock Average of 225 issues rose 38.16 points or 0.36% to 10725.97.

In Hong Kong, the main Hang Seng rose 36.37 points, or 0.29% to 12256.12. The Hong Kong bourse rebounded from Monday’s slump, which was triggered by worries about rising oil prices.