By Stewart Lewis

(May 26 – 09:00 ET) – U.S. traders will be on vacation next Monday, so analysts are predicting they’ll take a defensive stance today. Yesterday, the markets were spooked when a Goldman Sachs analyst predicted that Merril Lynch’s quarterly earnings will come in below expectations.

Early trading in the futures markets showed modest gains. The Standard & Poor’s 500 index futures rose 5.20 points to 1,394.20 while the NASDAQ 100 index futures gained 41.50 points, to 3,167.

This morning the U.S. April personal income and consumption report is due. Economists expect personal income to rise by 0.6% in April compared to a 0.7% rise in March.

Statistics Canada released its preliminary report for April industrial product prices this morning . They were unchanged in April compared with March, halting a 13-month string of monthly increases. “This marked the first time in more than a year that petroleum prices have had a downward influence on the Industrial Product Price Index. Prices for the refined petroleum industry declined 5.8% in April compared with March, on the heels of an agreement by the Organization of Petroleum Exporting Countries to ease cutbacks in production,” says StatsCan.

In Europe trading fell back this morning. London’s FTSE dropped 0.1% to 6226.40. Paris’ CAC fell 0.3% to 6112.64. In Germany, the DAX slipped 0.8% to 6925.87.

In Asia, the markets took Wall Street’s lead from yesterday. The Hang Seng fell by 1.4% to 13722.70. Decliners outpaced advancers 539 to 118. China Telecom recovered from morning lows to help buoy the index, closing just 0.41% lower at HK48.8. The Nikkei in Japan fell 1.5% to 16008.10.