North American stock markets look poised to open sharply lower as investors remained concern over efforts to prop up U.S. mortgage giants Fannie Mae and Freddie Mac, and as bourses tumbled in Europe and Asia.

Later this morning, U.S. Federal Reserve Chairman Ben Bernanke appears on Capitol Hill for his semi-annual monetary policy testimony before the Senate banking committee.

U.S. retail sales increased by just 0.1%, propped up by higher gas prices, the U.S. Commerce Department said today. Higher energy and food prices pushed up wholesale prices by 1.8% last month, the biggest one-month rise since last November.

General Motors announced plans to lay off salaried workers, cut truck production, suspend its dividend and borrow US$2 billion to US$3 billion as it adjusts to a declining U.S. market. GM said the moves will raise US$15 billion to help turn around its North American operations.

In earnings news, Johnson & Johnson reported an 8% rise in quarterly net income and increased its 2008 earnings estimates a second time.

Here at home, the Bank of Canada announced that it is maintaining its target for the overnight rate at 3%. The bank’s decision was widely expected.

In its accompanying statement, the bank said it expects economic growth in Canada this year of only one%. Growth is expected to rise to 2.3% in 2009 and 3.3% in 2010.

The Canadian dollar opened at US100.15¢, up 0.67 cent, ahead of the Bank of Canada announcement as the American dollar pulled back against most currencies.

In other economic news, Statistics Canada reported that new motor vehicle sales rose slightly in May, after three consecutive months of declines.

Consumers purchased 145,224 new vehicles in May, an increase of 1.1% from April. Shifting consumer preferences away from trucks to passenger cars has been the main factor in determining the direction of new motor vehicle sales in Canada so far this year.

Crude oil rose $1.21 to US$146.39 per barrel on the New York Mercantile Exchange.

Overseas, stock markets in Asia and Europe fell sharply with Hong Kong’s Hang Seng dropping 3.8%, Taiwan’s benchmark losing 4.5% and Tokyo’s Nikkei index down almost 2% to close at 12,754.56.

The FTSE 100 retreated 2.2% near midday in London, while Germany’s DAX lost 2.4% and the Paris CAC-40 was off 1.8%.

Deal activity in the energy sector kept the Toronto Stock Exchange’s main index above water on Monday.

The S&P/TSX composite index climbed 32.19 points, or 0.23%, to end at 13,741.29.

The junior S&P/TSX Venture composite index slipped 13.52 points, or 0.57%, to 2,378.34.

In New York, U.S. stocks declined on worries about the health of the banking sector outweighed optimism over the government’s plan to stabilize Fannie Mae and Freddie Mac.

The Dow Jones industrial average was down 45.35 points, or 0.41%, at 11,055.19. The S&P 500 was down 11.19 points, or 0.9%, at 1,228.30. The tech-heavy Nasdaq composite index was down 26.21 points, or 1.17%, at 2,212.87.