Stocks may open higher Tuesday as investors bargain hunt following recent market pullbacks.

In this morning’s economic news, U.S. housing starts dipped 2.1% in April as anticipation of higher interest rates damped home construction, the Commerce Department reported. Building permits rose 1.2%, the sixth straight monthly gain.

Statistics Canada is reporting that Canadian direct investment abroad was down 7.1% at the end of 2003, mainly as the result of the soaring Canadian dollar. At the same time, foreign direct investment in Canada increased 2.5%.

In business news, Alcan Inc. plans to spin off to its shareholders the rolled aluminum products businesses it held before recently acquiring France’s Pechiney — creating a new firm with 10,000 employees and over US$6 billion in annual revenue. Alcan said the move will address regulatory requirements from the $6.3 billion Pechiney acquisition.

In earnings news, The Home Depot said better customer service and strong sales helped it post a 21% jump in first-quarter profit, beating analyst expectations, and raised its forecast for the year. The home improvement store chain said Tuesday it earned US$1.1 billion, or US49¢ a share, for the three months ending May 2, compared with a profit of US$907 million, or 39¢ a share, in the same period a year ago.

Ontario Finance Minister Greg Sorbara will present the inaugural Liberal budget this afternoon. The government is expected to spend upwards of $5.5 billion more on health care and education over the next four years.

European shares are slightly higher at midday on strong earnings reports and declining oil prices.

London’s FTSE 100 is up 0.2% at 4,410.0, despite weaker-than-expected consumer-price data for April.

Shares are flat in Paris, with the CAC 40 index up slightly at 3,553.02.

In Frankfurt, the Xetra Dax Index was trading flat at 3,760, making slight gains following the overnight fall in oil prices.

Asian markets rebounded from Monday’s losses. Tokyo’s Nikkei rose 206.04 points, or 1.96%, to 10,711.09.

In Hong Kong, the Hang Seng Index rose 104.74 points, or 0.95% to 11,072.39, as bargain hunters stepped into the market following recent losses.

On Monday, the Dow Jones industrial average closed down 105.96 points at 9,906.91, its weakest level since early December.

The tech-heavy Nasdaq composite index declined 27.61 to 1,876.64, while the broader S&P 500 dipped 11.60 to 1,084.10.

In Toronto, another sharp drop in the shares of Nortel Networks helped to knock down the S&P/TSX index by 64.58 points to 8,123.5. The junior S&P/TSX Venture composite index edged 0.90 point higher to 1,549.38.