Stocks are likely to open flat or slightly lower Tuesday as investors wait for tonight’s state of the union address from U.S. President Bush.

Bush is expected to make the case for a possible war against Iraq, as well as outlining his administration’s plans for revitalizing the U.S. economy.

Stock markets fell sharply Monday after chief UN weapons inspector Hans Blix briefed the UN Security Council on his investigation in Iraq. Blix gave Iraq good marks for being quick in allowing access at sites inspectors have chosen to visit, but he complained that the Iraqis need to do more to help out.

Markets will also be looking ahead to a decision on U.S interest rates due Wednesday. The Federal Reserve Board is expected to keep U.S. interest rates unchanged, despite the recent slide in the stock market. The central bank’s policy-making committee meets Tuesday and Wednesday and will issue its interest-rate decision Wednesday afternoon.

In economic news, the U.S. Commerce Dept. reported that durable-goods orders for December increased US$0.4 billion or 0.2% to US$170.1 billion. This followed a 1.3% November decrease. Excluding transportation, new orders increased 1.1%.

In Europe, after an initial rally, markets have relinquished most of their early gains. Insurance stocks, such as Axa and ING, are under pressure. Frankfurt’s Dax is up 0.2%. The CAC in Paris is up 0.4%, and London’s FTSE is up 0.1%.

Overnight in Asia, markets closed mixed. The Nikkei average fell 1% to 8,525.39, while in Hong Kong, the Hang Seng rose 0.29% to 9,325.60.

In earnings news, Procter & Gamble Co. reported a 14% increase in second quarter profit. SBC Communications, the second-largest U.S. regional telecommunications carrier, reported a doubling of fourth-quarter profits despite a 5.3% drop in revenues

Technology services firm CGI Group posted higher first-quarter sales and earnings. The company reported net earnings of $37 million for the quarter ended Dec. 31. That’s up from the year-ago profit of $30.6 million.

After the bell yesterday, CP Rail posted strong fourth-quarter profits on flat revenues. The railway said it made $125.6 million, or 79¢ a share, up from last year’s Q4 net income of $97.7 million , or 62¢ — beating analysts’ estimates.