North American markets may slide Wednesday morning, as investors juggle some encouraging U.S. inflation data with a mixed batch of earnings results.

U.S. consumer prices fell for the first time in five months in December as oil prices dropped, suggesting that inflation has eased after surging for much of 2004.

The consumer-price index declined 0.1% last month, the Labor Department said Wednesday. The core index, which excludes volatile energy and food prices, rose by 0.2% for a third month in a row.

Economists had expected overall consumer prices to be stable in December, although forecasters accurately predicted the 0.2% increase in the core index.

Meanwhile, U.S. housing starts increased 10.9% to a seasonally adjusted 2.004 million annual rate in December, bouncing back from a bout of bad weather in November and finishing the year with the fourth annual increase in a row, the Commerce Department said.

Here at home, the annual inflation rate dropped to 2.1% in December as the price of gasoline fell from the month before.

Statistics Canada said a sample basket of goods and services cost 0.2% less last month than it did in November, thanks to a drop of more than 5% in pump prices.

December’s annual inflation rate came in slightly lower than economists had been expecting. They had been calling for the annual rate to edge down marginally from November’s 2.4% rate to 2.2% or 2.3%.

In today’s earnings news, J.P. Morgan Chase’s net income fell 11%, as charges related to its acquisition of Bank One ate into the Wall Street giant’s bottom line. Wachovia and Bank of New York posted profit increases

General Motors said its profit fell 37% as the auto maker faced widened losses in Europe and fast-rising U.S. health care costs

In other business news, Bombardier Transportation has landed a US$144 million order for 20 railway trains in Romania.

Gold and energy stocks boosted Canadian markets on Tuesday, while some strong earnings helped U.S. stay in the black.

At close, the S&P/TSX was up 70.93 points or 0.78% to 9,095.14, while the S&P/TSX Venture composite index slipped 0.85 points or 0.05% to 1,796.75.

In New York, the Dow Jones industrial average rebounded from a bad start to finish ahead by 70.79 points or 0.67% to 10,628.79. The tech-heavy Nasdaq composite index added 18.13 points or 0.87% to 2,106.04, and the S&P 500 was flat at 1,184.52.

The Canadian dollar was down 0.47 of a cent to US81.71¢ as the U.S. dollar gained ground against other currencies.