North American stocks are expected to get a lift from a report that shows U.S. consumer prices fell for the first time in nearly a year in May as energy prices slumped.

The U.S. consumer-price index declined 0.1% after four months of unexpectedly large increases, the Labor Department said today.

The drop, the first since July 2004, mostly reflected a 2% decline in energy prices. Prices of items other than food and energy rose 0.1% after holding steady in April.

Economists expect the CPI to be unchanged in May with a 0.2% core increase.

Separately, U.S. business inventory growth moderated during April, increasing at a mild rate that was in line with expectations as sales made their biggest surge of the year.

Inventories rose by 0.3% to a seasonally adjusted US$1.300 trillion after advancing a revised 0.5% in March, the Commerce Department said today. Business sales rose 1.2% after climbing a revised 0.8% the previous month. The 1.2% surge marked the biggest increase since demand climbed at the same rate in December.

Meanwhile manufacturing in the New York Federal Reserve district recorded a pronounced rebound in June, with the bank’s index of factory activity increasing to a reading of 11.65 compared to an upwardly revised -11.06 in May. May marked the first time in 25 months that the index had been negative.

Later today, the Federal Reserve is due to release the industrial production report. Economists estimate a 0.2% increase in production, reversing an April decline, and a slight 0.1 percentage point increase in the capacity utilization rate, to 79.3%, in May.

The Fed will also release its beige book of regional economic activity this afternoon.

In other economic news, OPEC has agreed to increase its daily production quota to bring it in line with the amount of oil the group is pumping. The output ceiling – now 27.5 million barrels a day – will be increased to 28 million barrels as of July 1.

Here at home, Statistics Canada said the number of new motor vehicles sold in April grew 1.6%, bringing sales to their second highest level since September 2003.

In business news, J.P. Morgan Chase said late Tuesday it agreed to pay US$2.2 billion to settle a class-action lawsuit filed by investors of Enron, the former highflying energy company that collapsed nearly four years ago.

On Tuesday, Toronto stocks edged lower, as losses in the financial and telecommunications sectors offset gains in the energy and utilities sectors. The S&P/TSX composite index fell 17.09, or 0.17%, to close 9,830.90

Volume was 223 million shares.

The junior S&P/TSX Venture composite gained 1.67, or 0.10%, to close at 1,677.52.

The Canadian dollar was up 0.18 of a cent to US79.80¢ as Statistics Canada said the value of manufacturers’ shipments rose 0.9% to $50.2 billion in April, exceeding economists’ expectations.

In New York, the Dow Jones industrial average advanced 24.94, or 0.24%, to 10,547.50. The tech-heavy Nasdaq composite index fell 2.02, or 0.1%, to 2,066.94, while the broader S&P 500 finished up 2.82, or 0.23%, to close at 1,203.64.