Stocks look to open flat to down this morning. Traders are cautious after yesterday’s rally pulled back dramatically at the end of the day.

As well, telecom stocks are looking weaker this morning after some negative comments from French giant Alcatel SA, and a Merrill Lynch & Co. forecast stated spending on cell phone networks will decline next year.

The economic news isn’t providing much joy to traders either. The productivity of U.S. workers reportedly rose at a revised 2.1% annual rate in the second quarter. This is more or less on expectations, down from initial estimates of 2.5%.

In Canada, the value of building permits issued was flat at $3.4 billion in July, unchanged from June. A decline in permits for housing was offset by a rebound in the non-residential sector.

The value of non-residential permits jumped 13.9% to $1.6 billion, owing mainly to a jump in the commercial component. In contrast, after two strong monthly increases, the residential sector dropped 10.2% to $1.8 billion, as construction intentions for multi-family dwellings plunged.

In Europe, stocks are generally weak today. The gloom from Alcatel and Merrill Lynch is weighing on phone stocks. Also, strong inflation numbers in the U.K. suggest that its rate cutting may be constrained. As well, German unemployment fell unexpectedly in August. The FTSE is down 40 points to 5,340. The CAC 40 has dropped 64 points to 4,610. The DAX is down 98 points to 5,110.

Overnight in Asia, markets continued to head lower following the trajectory of U.S. markets yesterday and general economic fears. The Nikkei shed 174 points to 10,599. The Hang Seng dropped 194 points to 10,943.

In M&A news, AngloGold Ltd. is bidding US$2.3 billion for Australia’s Normandy Mining Ltd.

In other news, AEC is forecasting to more than double its year 2000 daily oil production to over 235,000 barrels per day by 2004 from Western Canada, Syncrude and Ecuador with exploitation of known reserves.