Investors will have to wade through mixed signals Wednesday as they digest news of a merger deal between Kmart and Sears, solid earnings results from Hewlett-Packard, and rising U.S. inflation.

U.S. consumer prices rose 0.6%, the fastest clip in five months, during October amid a surge in energy and food prices.

The consumer-price index rose by a larger-than-expected 0.6% last month, three times the rate in September, the U.S. Labor Department said today. More than half the increase was due to surging energy prices, the department said. The core index, which excludes energy and food prices, moderated to a 0.2% rate of growth from 0.3% in September.

Economists had called for a 0.4% gain in the overall index and a 0.1% increase in the core index.

Meanwhile, U.S. housing starts rebounded sharply in October, jumping 6.4%. However, building permits, an indicator of future activity, fell mildly, decreasing by 0.7%.

There are no major economic releases from Statistics Canada this morning.

The Canadian dollar opened at US83.89¢, up 0.25 of a cent. The loonie had risen 0.34 of a cent Tuesday, to US83.64¢.

In business news, Kmart Holding Corp. and Sears, Roebuck & Co. have agreed to merge in an US$11 billion transaction. The deal, announced today, will create the third-largest U.S. retailer, named Sears Holdings Corp., with US$55 billion in annual revenue.

In earnings news, H-P quarterly profit climbed 27% on a 7.7% sales rise, driven by companywide growth and tight cost controls.

On Tuesday, Toronto stocks eked out a small gain after getting a late afternoon boost from gold issues. The S&P/TSX composite index closed up 14.78, or 0.16%, at 8,952.00, on volume of 257 million shares.

The gold sub-index climbed nearly 2% as gold futures remained above US$444 an ounce.

The junior S&P/TSX Venture composite index finished up 5.48 points, or 0.33%, at 1,660.08.

U.S. stocks ended lower Tuesday as a stronger-than-expected rise in wholesale inflation sparked concern about the pace and size of future interest rate hikes.

The blue-chip Dow Jones industrial average fell 65.59 points, or 0.59%, to close at 10,487.65.

The tech-heavy Nasdaq composite index slipped 15.47 points, or 0.74%, to finish at 2.078.62.

The broader S&P 500 shed 8.38 points, or 0.71%, to end at 1,175.43.