By James Langton

(May 3 – 09:00 ET) – Stocks are expected to drop this morning, after web designer Macromedia Inc. and chip-equipment maker Asyst Technologies Inc. issued poor results. Tech profits are suspect again after days of optimism.

The markets are down in Europe after the weak tech earnings. European Economic Confidence fell last month for the fourth month in a row. The FTSE in London is down 85 points to 5818. The Paris CAC 40 has shed 77 points to 5496. The German DAX is down 99 ticks to 6114.

The Japanese markets were holiday again. The Hang Seng was open though, and dropped 96 points to close at 13718.

On the M&A front, insurance merger activity has begun. The first deal is a cross-border affair. Sun Life Financial Services of Canada Inc. is buying Liberty Financial subsidiaries Keyport Life Insurance Co. and Independent Financial Marketing Group for a total of US$1.7 billion, about $2.6 billion. The acquisition, which is subject to approvals by U.S. and Canadian regulators as well as Liberty Financial’s shareholders, is expected to close in the third quarter.

Air Canada today reported a net loss of $168 million or $1.40 per share and an operating loss of $293 million for the quarter ended March 31. It also announced a strategic alliance with Roots Air operator, Skyservice. Skyservice is suspending all Roots Air scheduled flights effective May 4 to partner with Air Canada.