By James Langton

(January 12 – 9:00 ET) – Canada’s new housing price index annual rate increased 2.5% in November. This was the highest annual increase since May 1990 when the index rose3.8%. On a monthly basis, the index rose 0.4% from October to November — a positive sign.

In the U.S., computer stocks have been weak after warnings, last night, from Hewlett-Packard Co. and Gateway Inc.

We’ve got mixed bag of economic numbers coming out of the U.S.. Economists, it seems, overestimated the retail sales slowdown and underestimated producer price inflation. Retail sales for December were up 0.1%. Excluding auto sales,they came in unchanged.

Retail sales were expected to move down by 0.5%, with a 0.2% gain excluding autos. While this would seem to indicate less risk of recession, inflation numbers are higher than expected, possibly limiting rate-cut room.

The U.S. Producer Price Index came in unchanged, but it was up 0.3% on the core rate. Market watchers expected it to rise by 0.1% on both the headline and the core. This has traders looking toward a 25 basis-point cut at the next meeting of the U.S. Federal Reserve, rather than the 50 bps some have been calling for.

Overseas markets are mostly up this morning. In Europe, stocks are being led by Alcatel and other techs which are attracting bargain hunters. London’s FTSE is up 40 points to 6155. The Paris CAC 40 has gained 99 points to 5801. The German DAX has gained 80 points to 6545.

In M&A news, America Online Inc. closed its US$124 billion purchase of Time Warner Inc. after it received its FCC approvals.

Overnight in Asia, stocks rallied, too. The Nikkei added 147 points to 13348. The Hang Seng closed up another 204 points to 15295.

In other business news, Globel Direct inc. has raised its intended offer price for Cybersurf Corp. Globel is offering Cybersurf shareholders a choice of either 0.4 of a Globel share for each Cybersurf common share, or 0.357 of a Globel share and 8¢ in cash.