North American stock markets were expected to open lower after the Bank of Canada set the tone for higher interest rates by announcing a 25-basis-point jump Wednesday morning.

The central bank said it has raised the rate one-quarter point to 2.25% from 2.0%.
Economists said this week that recent economic data has been quite strong, suggesting there will be further interest rate hikes from the bank. As recently as April, the bank was still cutting interest rates to give the economy a boost, but the economy has improved since then.

U.S. investors are also bracing for U.S. Federal Reserve chairman Alan Greenspan’s appearance at a House of Representatives committee meeting. Most economists say he is likely to signal more U.S. rate increases in coming months.

Wall Street futures suggested a weak start for regular trading and European indices were flat.

Stocks were mostly lower across Asia, with prices in Tokyo and Hong Kong dipping as traders sold property and technology issues.

Japan’s Nikkei Stock Average of 225 issues dipped 19.75 points, or 0.17%, to 11,279.19. A bad performance by key semiconductor shares in the United States harmed sentiment.

Hong Kong shares fell as traders sold property stocks after recent gains in the sector. The Hang Seng Index dropped 86.08 points, or 0.66%, to 13,049.96.


On Tuesday, a sharp drop in oil prices put Wall Street in a buying mood, but held back traders on Bay Street Tuesday. The price of crude oil futures for October delivery on the New York Mercantile Exchange dropped 68¢ to US$43.31 a barrel.

The Canadian dollar surged 0.76 of a cent to US77.69¢ – its highest close since January – a day before the Bank of Canada was widely expected to hike its key rate for the first time in 17 months. The dollar’s rise came even as Statistics Canada announced a slowing in the housing sector during July. The agency said Tuesday that building permits fell 11.4% to $4.8 billion from June.

At close, the S&P/TSX composite was up 24.95 points or 0.3% to 8369.37. The TSX Venture exchange was hurt by a drop in gold prices; it lost 21.97 points or 1.44 % at 1505.62.

The Dow Jones Industrial Average closed 82.59 points, or 0.8% higher to 10,342.79, while the Nasdaq composite index moved 14.08 points higher at 1858.56 and the S&P 500 index was up 7.67 points to 1121.3.

In corporate news, the China Banking Regulatory Commission has approved the Bank of Nova Scotia’s application to buy an unspecified stake in Xi’An City Commercial Bank, CBRC chairman Liu Mingkang said Wednesday. Liu didn’t elaborate on the size of the stake, but an International Finance Corp. representative said Scotiabank received approval for a combined stake of about 5% with the IFC.

With the CBRC approval, Scotiabank has gained a foothold in the country’s banking sector ahead of the full liberalization scheduled in 2006 under China’s WTO commitments.

Eleswhere, Delta Air Lines will cut up to 7,000 jobs, or 10% of its overall work force, during the next 18 months, company CEO Gerald Grinstein said Wednesday. In addition, Delta will no longer use the Dallas-Fort Worth airport as one of its four hubs, he said during a meeting with 300 of the company’s middle managers. Instead, Delta will expand its hubs in Cincinnati and Salt Lake City with redeployed aircraft from Dallas-Fort Worth.