Traders are overlooking an unexpectedly strong report on Canadian housing to focus on corporate news. Word that housing starts blew away expectations in October caused barely a ripple in the market, amid news of a big M&A deal, Air Canada’s planned emergence from bankruptcy, and a slew of earnings reports. At midday, the S&P/TSX composite index is down 57 points.

Almost 122 million shares have changed hands so far , with the buying action outpacing the selling by a margin of about 13:9. However, market breadth is negative, with losers outnumbering winners by a six to five margin.

Techs and biotechs are the weakest groups so far today, down 1.5% and 1.8% respectively. Financials are very soft, dropping 1.3%. There is also weakness in real estate, consumer discretionary stocks and energy trusts.

Gold stocks are up a bit, as are utilities.

The big stories today are Air Canada and Moore Wallace. And, both stocks are up. Air Canada has gained 12% on news that the company is set to come out of bankruptcy with the Li family taking a big stake in the firm.

The news is not so good for Cara Operations, which has been halted all morning after reporting that Air Canada has repudiated its contract to provide catering services to the airline. The contract represents approximately 13.7% of Cara’s revenues. It says that until the matter is fully resolved, it is difficult to completely assess the impact of the repudiation on Cara and its earnings. As a result, the firm is reconsidering its previously announced proposal to go private.

The other big news today is the planned takeover of printer, Moore Wallace. It has jumped almost 5% on news of the deal, with 3.2 million shares crossing the floor.

The big stories aren’t the ones weighing on the market though, that pressure is coming from fears that the Bank of Canada won’t fight currency inflation.

That feeling is whacking big names such as Nortel, which is down 2% in very light trading. The financials are getting thumped, too, with Royal Bank down 1.2%. There is similar selling in Scotiabank, CIBC, TD and Manulife Financial. Alcan is also down notably.

Following Nortel lower, there is weakness in ATI, Zarlink Semi, Ballard Power, and Telesystem International Wireless. BCE is slumping, too, while Cedera Software is one of the few firms bucking the trend.

The biotechs are lower, with VSM MedTech falling once again. It is down almost 8%, and QLT is 3.5% lower.

The film projection firm, Imax, is down more than 11% after it announced a US$2.65 million third quarter loss, and it reported plans to refinance all of its outstanding debt through an offering of new senior notes.

Hip Interactive is down 7.5% after reporting that its net earnings for the quarter were $2.4 million, compared with $1.7 million for the same period last year.

Provident Energy Trust has dropped more than 7% on news that it lost $1.7 million in the quarter.

Other losers include Canadian Natural Resources, Niko Resources and Southwestern Resources.

Golds are one of the few areas offering resistance to the broad selloff. Barrick is up a modest 0.6%, and Nevsun Resources is making a solid gain.

Other winners include Ivanhoe Energy, Ivanhoe Mines, EnCana, Hawker Resources, Weston and Saskatchewan Wheat Pool.

In other earnings news, Canadian Real Estate Investment Trust said that it earned $13 million in its third quarter.

Onex said that its quarterly net loss was $287 million, compared with net earnings of $34 million in the third quarter of 2002. Included in the third quarter net loss was a non-cash charge of $214 million related to good will writedowns recorded by J.L. French and a $46 million net loss on Magnatrax’s discontinued operations.

Stuart Energy Systems said that it lost $7.9 million in its latest quarter.

Intrawest Corp. earned US$938,000 in its first quarter of fiscal 2004.

Vermilion Energy Trust said that its third quarter income jumped to $13 million in 2003.

Sun-Rype Products reported that net earnings were $1.1 million for the third quarter of both 2002 and 2003.

In New York, stocks are heading lower, also on the feeling that recent market gains are overdone. There’s no economic news out in the U.S. today. The Dow Jones industrial average is down 51 points at midday to 9,759. The Nasdaq composite index is 17 points lower at 1,953. The S&P 500 has lost five ticks to 1,048.