Markets are recovering from yesterday’s currency-led selloff. At midday, the S&P/TSX index is 30 points stronger at 7,597.

Traders are also digesting the news of weaker than expected Canadian inflation, clearing the way for further cuts to interest rates later this year. Markets appear to be expecting a cut as soon as October.

The 12-month increase in the Consumer Price Index eased to 2% in August from 2.2% in July.

Toronto volume is average at 119.9 million shares, with the buying swamping the selling by a margin of 24:13. Market breadth is also bullish, as winners trump losers 10:9.

On a sector basis, the gains are very broad-based. The only areas seeing some slippage are real estate and telecoms. Everything else looks higher.

Energy stocks are leading the way, with a 1.1% gain. Most of the gains are otherwise modest, although there is strength in consumer names, techs, golds and materials.

Nortel Networks is back leading the trade once again today, gaining 2.3%, albeit on light volume of less than 9 million shares. There are also solid gains for Research in Motion, Mitec and Sierra Wireless. However, Celestica is a little weaker and CGI is notably weaker.

Biotechnology shares are generally slumping. Recent gains are giving way to profit-taking, with slides coming in Cryocath Technologies, Oncolytics Biotech, Biovail, VSM MedTech and Aeterna Labs. Against this, Hemosol is rallying, as is Bioscrypt and Forbes Medi-Tech.

The telecoms are down on a 0.5% slide in BCE. There is also a squabble going on in the industry, as Shaw Cablesystems has filed an application with the Canadian Radio-television and Telecommunications Commission asking the commission to order Telus to stop its anti-competitive pricing of high-speed Internet services, and ensure fair and sustainable competition in the high-speed Internet access market.

On the upside, EnCana is leading the energy group higher, gaining 1.6%. Canadian Natural Resources is stronger, too.

Most blue chips are bouncing today, including Thomson, Loblaws, Placer Dome, CN Rail and the banks. TD Bank is up, as is Royal Bank, despite news that its auditor is resigning to avoid a conflict on interest. Other gainers also include Westaim and Canadian Zinc.

On the downside, Bombardier is sliding, as is WestJet, Ivanhoe Energy and Northgate Exploration.

In business news, Barrick Gold has unveiled a new organizational design and has made several key appointments, including the appointment of Peter Kinver as chief operating officer. The other changes are designed to streamline reporting at the corporate level, and increase accountability and responsibility at the regional level, with the creation of three regional business units.

Wallbridge Mining has signed a binding letter of intent to form a joint venture with Noranda Inc. to explore the Abitibi greenstone belt in Northeastern Ontario.

IPC Financial Network says it has received, but not accepted, an unsolicited proposal for a strategic transaction. IPC has engaged Scotia Capital Inc. to help the company evaluate strategic opportunities.

TransCanada Corp. has exercised its right to increase its ownership interest in Portland natural gas transmission system by 10% to 43.4% by acquiring a portion of DTE East Coast Pipeline Company’s interest in PNGTS for approximately US$47.1 million, including assumed debt of approximately US$27.8 million.

In New York, stocks also opened higher, but by midday they’ve given up their gains. The Dow Jones industrial average is now more or less unchanged at 9,535. The Nasdaq composite index has gained eight points to 1,883. The S&P 500 is up two points to 1,025.

The S&P/TSX Venture index is also two ticks higher at 1,384. Volume is strong at 36.3 million shares, led by Cantex Mine Development. Cantex is 1.5¢ higher at 8¢, with 1.6 million shares traded.