North American stocks are expected to rally Wednesday morning as oil prices decline, but lingering concerns about inflation and the Federal Reserve’s direction on interest rates may curb gains.

Stocks extended a broad selloff into a second day Tuesday after U.S. Federal Reserve chairman Ben Bernanke spooked markets by saying the central bank will remain vigilant in fighting inflation.

Crude-oil prices fell 73¢ to US$71.77 a barrel in early trading Wednesday on signs Iran was responding somewhat positively to a package of incentives by world powers hoping to curb its nuclear program.

U.S. weekly energy supplies data are due at 10:30 ET, with expectations that gasoline inventories will rise and crude-oil inventories will fall.

The Canadian dollar opened at US89.70¢ Wednesday morning, down 0.15 of a cent from Tuesday’s close.

In M&A news, LionOre Mining International has agreed to buy a Norwegian refinery from Falconbridge Ltd. in a deal designed to expedite Falconbridge’s proposed merger with Inco Ltd.

LionOre will buy the Nikkelverk refinery for US$400 million in cash and US$250 million in LionOre common shares.

Novartis agreed to buy a United Kingdom maker of anti-infectives for over US$500 million, and European pharmaceutical rival GlaxoSmithKline agreed to a licensing deal for arthritis drugs.

European stock indexes were mostly positive Wednesday, the Paris-based CAC 40 ahead 11.11 points at 4,809.03, London’s FTSE 100 gaining 21.1 points to 5,690.9 and Germany’s DAX up 31.4 points to 5,534.21.

Most Asian markets plunged Wednesday, tracking overnight declines on Wall Street.

In Tokyo, the Nikkei 225 index shed 288.85 points, or 1.88%, to 15,096.01 points. The index has fallen 4.4% over the last three days.

In Hong Kong, shares fell for the second straight session, with the Hang Seng Index falling 156.56 points, or 0.98%, to 15,816.55.

North American stocks were down Tuesday, though not to the extent seen in Monday’s selloff, as the mood among investors turned bearish.

The S&P/TSX composite index closed down 33.35, or 0.29%, to 11,666.14.

Six of the 10 TSX main sub-groups were down.

The S&P/TSX Venture composite index lost 73.06 points, or 2.58%, to 2,757.17.

In New York, the Dow Jones industrial average closed down 46.58 points at 11,002.14, after falling as much as 120 points lower during intra-day trading. The Nasdaq composite index lost 6.84 points at 2,162.78, and the S&P 500 fell 1.44 points to 1,263.85.