Stocks may open higher Tuesday after the U.S. consumer-price index report for May matched analyst expectations for core inflation.

The U.S. Labor Department reported that the Consumer Price Index rose 0.6%, the largest increase since January 2001, following a 0.2% rise in April.

The core index, which excludes food and energy items, rose a more moderate 0.2%, down from a 0.3% rate in April.

Economists had been expecting a 0.5% increase in the overall index; the core increase matched their expectations precisely.

The data would seem justify a move by the Federal Reserve to raise interest rates for the first time in four years when it meets later this month, economists say. The next Fed meeting is set for June 29 and 30.

In a separate report, the Labor Department said the average weekly earnings of U.S. workers, adjusted for inflation, decreased by 0.4% in May. Average weekly hours were unchanged.

Meanwhile, U.S. business inventories posted a stronger-than-expected increase during April, while sales fell slightly as companies replenished some stocks that had been trimmed by hot demand. Inventories increased 0.5% to a seasonally adjusted $1.212 trillion, after an unrevised 0.7% advance in March, the Commerce Department said. Forecasters has projected an advance of 0.4%.

North of the border Statistics Canada said Canadian manufacturing continued to pick up steam in April. Shipments rose another 0.5% to $48.5 billion, extending the string of consecutive gains to five months, the longest since the late 1990s.

In addition, robust demand from abroad boosted manufacturers’ backlog of unfilled orders, StatsCan said. Unfilled orders for April are up a solid 6.6% since the close of 2003, it added.

The statistical agency said year-to-date shipments were up 3.1% compared with the same period in 2003, with much of the strength coming from the big-ticket, durable goods sector.

In earnings news, Lehman Brothers Holdings Inc.’s second-quarter profit climbed 39% on healthy gains in all of its businesses.

The Wall Street financial-services company said it earned US$609 million, or US$2.01 a share, for the quarter ended May 31, up from US$437 million, or US$1.67 a share, a year ago.

Asian stock markets closed lower overnight.

Tokyo’s Nikkei fell 103.96 points to 11,387.7. In Hong Kong, the Hang Seng slipped 25.88 points to 12,050.69.

European bourses are higher in midday trading. London’s FTSE 100 index is ahead 23.2 points at 4,456.4.

Frankfurt’s DAX is up 0.43% while the Paris CAC 40 is 0.73% higher.

North American markets began the week on a negative note, as a report of strong retail sales in the U.S. sparked concerns about increasing interest rates, driving markets lower.

In Toronto, the S&P/TSX dropped 74.32 points to 8,292.31. The S&P/TSX Venture composite index fell 32.15 points to 1,527.40.

On Wall Street, the Dow Jones industrial average closed down 75.37 points at 10,334.73. The S&P 500 Index ended down 11.18 points or at 1,125.29, while the tech-heavy Nasdaq composite index slid 29.88 points, or 1.49%, to finish at 1,969.99.