By James Langton

(July 12 – 13:00 ET) – Stocks soared to new highs this morning on the back of the technology sector. The TSE 300 is up 148 points at midday to 10,498. Volume is soft again though, at 58 million shares. The tone is decidedly positive with volume more than 2:1 in favour of buyers, and advancers edging decliners.

Technology is leading the way. It’s up more than 3% on strong gains in Nortel Networks Corp. Joining the tech stocks on the upside are paper, publishers, and conglomerates. Golds are weak, as are biotechs and cable names.

Nortel is powering ahead, up 3.6% on 3.4 million shares. M&A activity is also sparking action with Teklogix up more than 30% on news of its impending buyout by Psion. PMC-Sierra is also up on news that it is pulling a JDS Uniphase copycat deal, spending US$2.3 billion to buy Quantum Effect.

Speaking of JDS, it’s up 4% today as the skeptics subside a little. Exfo is strong again today, joined by Mosaid, Sierra Wireless, GSI Lumonics, Cell-Loc and Research in Motion.

Among the big caps, Bombardier is joining Nortel with strong gains. Ranger Oil and Laidlaw are also up notably in active trading. Merrill Lynch exchangeables are strong, too, on news of PaineWebber’s buyout by UBS.

On the downside takeover target Winspear Diamond is sliding, as is Seagram. Dia Met is sliding with Winspear, and biotechs, Biovail and QLT, are off recent gains.

In other business news Thomson Corp. has sold its Connecticut newspapers to MediaNews Group Inc. for an undisclosed sum. The deal is the last of its U.S. newspaper sales as it transforms into an electronic publisher.

In the U.S , techs and brokers both strong. News of the UBS-PaineWebber deal is boosting all the brokerage firms with rumours flying about the street. J.P. Morgan and Lehman are tipped as possible targets, and Merrill is always a source of gossip.

On this chatter the Dow is up 47 points to 10,773. Among the techs, strength in Yahoo earnings are leading the way. Its stock is up more than 17% and the NASDAQ composite is lifting many boats, rising 102 points to 4,058. The S&P 500 has gained just eight ticks to 1,488.

Despite the action on the big boards, small caps are sliding. The CDNX is off two points to 3,371 on average volume of 16.8 million shares. Techs are strong but mines are weak. Mountain Boy Minerals is the top trader, flat at 35¢ on 1.2 million shares.