Investors will be mulling over a major Canada-U.S. forestry merger when markets open Wednesday.

Domtar Inc. today announced it plans to merge with U.S. forestry giant Weyerhaeuser Co.’s fine-paper business in a US$3.3 billion deal.

The move would create North America’s largest manufacturer and marketer of uncoated freesheet paper in North America and the second-largest in the world, with an enterprise value of US$6 billion, Domtar said.

In today’s economic news, Statistics Canada said the composite index rose by 0.2% in July, after an upward revised 0.3% increase in June. The components related to consumer spending continued to lead growth.

The Canadian dollar opened at US89.97¢, up 0.32 of a cent.

South of the border, a report is due on July existing home sales at 10:00 ET. Already down 9% in the past year, economists call for a 0.9% drop in U.S. existing homes sales last month to a seasonally adjusted annual rate of 6.56 million.

Oil prices dropped slightly Wednesday as traders locked in profits in response to Iran’s offer to continue negotiations on its nuclear program. Light sweet crude for October delivery was down 18¢ to US$72.92 US a barrel in Asian electronic trading on the New York Mercantile Exchange.

In today’s earnings news, Nestle reported an 11% rise in first-half net profit despite higher raw material prices on cost cutting and organic growth, and said it expects full-year organic growth to be at the top end of its targeted range.

Mining giant BHP Billiton’s annual net profit climbed 63%, setting a new Australian corporate-earnings record thanks to soaring metal prices and insatiable demand from China.

In more merger news, International Business Machines agreed to acquire Internet Security Systems for US$1.3 billion, or $28 a share. The companies expect the deal to close in the fourth quarter.

Mosaid Technologies Inc. has rebuffed a New York City-based hedge fund’s calls for the computer chip company to put itself up for sale.

Overseas, Japan’s Nikkei 225 index retreated from dipped 18.14 points, or 0.11 per cent, to 16,163.03 on the Tokyo Stock Exchange.

In Hong Kong, the blue-chip Hang Seng Index fell 61.36 points, or 0.4 per cent, to 17,088.39.

Toronto stocks were up Tuesday on the strength of the energy and financials sectors.

The S&P/TSX composite index moved up 64.22 points, or 0.53%, to 12,201.15.

Eight of the 10 TSX main sub-groups were up, with the energy index up 1.08%.

The financials sector gained 0.42%

Bank of Montreal gained 93¢, or 1.42%, to $66.35 after reporting a record quarterly income gain of 30% to $710 million.

The S&P/TSX Venture composite index moved up 17.10 points, or 0.65%, to 2,634.17.

In New York, markets closed mixed as investors remained wary of the prospects of the U.S. economy and uncertain over the Federal Reserve’s direction on interest rates.

The Dow Jones industrial average closed down 5.21 points at 11,339.84. The Nasdaq composite index closed up 2.27 points at 2,150.02 and the S&P 500 finished up 1.30 points at 1,298.82.