Despite huge buying in Nortel Networks, weak corporate news and war fears are dragging Toronto stocks lower at midday. The S&P/TSX index is down 45 points to 6,693.

Volume is very strong at 161 million shares, with the buying overwhelming the selling by a five to two margin. Market breadth is decidedly negative however, with losers outnumbering winners 23:15.

Nortel is powering the techs to a 2% gain. As well, nervous markets are giving the golds a 2% boost.

Everything else is down, though. Telecoms have dropped 2%, the heavyweight financials are down more than 1%, and there is weakness in energy stocks, industrials and health care.

Nortel is powering the upside today with a 10% gain on massive volume of almost 60 million shares. The stock is booming after it beat analyst expectations to the upside for a change yesterday.

Open Text is higher today, too, but there’s not too much spillover in the tech sector from Nortel’s good news. JDS Uniphase is sliding, as is CAE. Royal Group Tech is own more than 15% after it issued an earnings warning.

The golds are much more unified in their rally. Barrick and Placer Dome are leading the way as usual, with 3% and 2.5% gains respectively, on decent volume. Other gainers include Kinross Gold, TVX Gold, Northgate and Nevsun Resources.

The downside is being led by a mix of big cap names that are sliding on a general nervousness about stocks that has taken hold in the U.S. BCE is leading the telecoms down another 2% today. Telus is down almost 5%.

Scotiabank is leading the financials down. Inco has dropped, and Suncor Energy is almost 2% lower. Other losers include diverse names such as Air Canada, Gauntlet Energy, CanWest, Four Seasons, and Southwestern Resources.

In M&A news, TransAlta is acquiring half of a U.S. generator from El Paso Merchant Energy. TransAlta will purchase El Paso’s 50% interest in CE Generation LLC. MidAmerican Energy Holdings Co. will continue to own the other 50%.

TransAlta will pay El Paso US$205 million plus approximately US$35 million in working capital. In addition, should TransAlta decide to participate in building the geothermal development project, it will pay El Paso another US$30 million for its development work. TransAlta will finance the acquisition with existing credit facilities. The transaction is expected to close by the end of January.

In other news, Lassonde Industries intends to buyback 10% of its Class A subordinate voting shares.

In earnings news, Westport Innovations reported its net loss for the last quarter was $12,204,996, compared with $9,024,543 a year earlier. The results are in line with Westport’s revised second half target as announced in mid-December.

In New York, stocks opened lower and have headed south throughout the morning. At midday, the Dow Jones industrial average is down 214 points to 8,155. The S&P 500 is down 24 points to 863. And, Nasdaq is off by 42 points to 1346.

The S&P/TSX Venture index is flat at midday at 1,127. Volume remain strong at 29 million shares. Quaterra Resources is the top trader on the day, up 33% to 24¢ on more than 1.8 million shares traded.