North American stocks may slide at Monday’s open as Middle East fighting continues, and oil prices remain near record highs.

Mideast violence escalated Monday as Israeli ground troops entered southern Lebanon to attack Hezbollah bases on the border.

Crude-oil prices have seen wild swings so far today, plunging more than US$1 a barrel on a report that Iran had accepted incentives to resolve a dispute over its nuclear program, then quickly retracing some lost ground as Israel’s operations against Hezbollah seemed unlikely to end soon. Oil prices fell 28¢ to US$76.75 a barrel in early trading in New York.

In M&A news, Phelps Dodge and Inco raised the cash portion of their Falconbridge offer, in response to an upped bid from Xstrata. The total Phelps Dodge bid for Inco and Falconbridge is worth US$41 billion.

In today’s earnings news, Citigroup’s net income rose 3.8% in the second quarter amid the opening of new consumer branches and revenue growth in the financial-services provider’s corporate and investment banking. The banking giant’s revenue rose 10% to US$22.18 billion.

Philips Electronics reported a 69% drop in second-quarter net profit in the absence of items that inflated year-earlier results, but the Dutch company’s operating-profit numbers improved and it said it is on track to meet its full-year sales and margin targets.

Mattel swung to a net profit in the second quarter, driven by summer-entertainment toy lines based on the “Cars” and “Superman Returns” films.

Novartis’s net profit rose 4% in the second quarter, driven by higher sales of the Swiss pharmaceutical maker’s heart and cancer drugs.

In today’s economic news, manufacturing activity in the New York Federal Reserve district declined in July with the overall index slipping to a reading of 15.64 from 29.01 in June. Economists had forecast a falloff to a reading of 20.0.

Other economic reports are due later on July industrial production and capacity utilization.

Here at home, Statistics Canada said Canadian acquisitions of foreign securities amounted to $10 billion in May, the third highest on record. Meanwhile, non-residents increased their buying of Canadian securities to $5.7 billion worth.

Separately, the government agency said new motor vehicle sales weakened somewhat in May, declining 1.0%. This came on the heels of a 0.7% drop in April.

Canadian consumers drove 135,618 new vehicles off dealer lots in May, down almost 1,400 vehicles from the previous month.

The Canadian dollar opened at US88.28¢, down 0.33 of a cent.

Major Asian markets declined, dragged down by worries about Middle East tensions.

In Hong Kong, the blue-chip Hang Seng Index falling 70.89 points, or 0.4%, to 16,064.82.

In Japan and South Korea markets were closed for national holidays.

On Friday, Toronto stocks closed modestly higher, as higher resource prices offset investors’ overall jitters over global tensions.

The S&P/TSX composite index gained 28.07, or 0.24%, to 11,630.01.

The S&P/TSX Venture composite index lifted 0.15, or 0.01%, to 2,630.52.

In New York, markets continued to fall as investors were shook by higher commodity prices and instability gulfing the Middle East.

The Dow industrials dove 106.94 points, or 1%, to close at 10,739.35. The Nasdaq composite index fell 16.76 points to 2,037.35, its lowest closing level since May 2005. The S&P 500 dropped 6.09 points to 1,236.20.

For the week, the Dow fell 3.2%, the S&P 500 lost 2.3% and the Nasdaq shed 4.4%.