By James Langton

(March 6 – 09:00 ET) – The latest U.S. Producer Price Index came is up 1.0%, far
ahead of expectations of 0.7%. However, the core rate was right on target at
0.3%. Inflated energy prices slammed the PPI. So traders are focusing more on the stableity of the core rate. Gas prices were up 13% in the month and heating oil prices added 30%. Tomorrow’s U.S. Consumer Price Index will be closely watched too.

All of this inflation watching is inspired by interest rates cocnerns. In Europe they are up. As expected the European Central Bank raised its rates 25 basis points this morning.
Stock markets are generally up in Europe, as traders endorse ECB vigilance. Euro-traded U.S.-based tech stocks such as AOL and Sun are actually leading the recovery. London’s FTSE has gained 122 points to 6,569. France’s CAC 40 is up 81 points to 6,270. Germany’s DAX has added 151 points to 7,566.

In M&A news BMW is expected to buy Rover from the U.K.-based venture capitalists that own it. Traders are optimistic that Atlantic Richfield Co.’s takeover by BP Amoco PLC will go ahead as planned with Arco agreeing to sell its Alaskan assets to Phillips Petroleum Co.

In Asia stocks were mixed. Japan recovered, but renewed sabre-rattling between China and Taiwan spooked traders. Techs led Japan’s snap back. The Nikkei closed up 175 points to 19,253. The Hang Seng slipped 388 points to 16,359.

Statistics Canada reports manufacturers’ shipments climbed 1.1% in January to $43.7 billion, led by the aircraft, wood, and refined petroleum and coal industries. Economists expected a rise of 1.0%.