By James Langton

(December 18 – 13:00 ET) – Toronto’s opening rally fizzled as traders couldn’t convince themselves that the U.S. Federal Reserve Board will cut interest rates tomorrow.

Currently the TSE 300 is down 39 points to 8,980, after opening above 9,100. Volume is a little soft at 62.3 million shares. It’s split about evenly between buyers and sellers. Losers outnumber winners about nine to eight.

Tech stocks are the weak spot today, with the industrials group down 3%. Pipelines and media stocks are down a little, but every other sector is flat or up.

Market heavyweight Nortel Networks is weighting to weigh down the whole market. It is off about 5.4% on a volume of 4.4 million shares, as some of the optimism concerning interest rates evapourates.

This morning Nortel announced a deal to sponsor the development of wireless modems with Sierra Wireless. Sierra says the deal won’t impact its earnings or expenses until the second quarter of 2002.

Following Nortel down is Research in Motion, C-MAC, Cognos, Open Text, Delrina, and today’s earnings warning, Royal Group Technologies.

Apart from the techs there is some broad-based buying. Top gainers include old economy names such as Veritas, Northstar Energy, Weatherford Oil Services, Potash and Burlington.

There are some high tech winners, too, including Alcatel, Janna and Ballard Power. Blue chips such as BCE, Bombardier and Gulf Canada are also up.

Among financial stocks, Manulife is leading the way, it’s up more than 3%. The banks are all up modestly, too.

Clarica Life Insurance is making some strong gains after it announced it will buy Royal Bank’s $3.1 billion group retirement services business for $45.4 million. Fund company stocks are weak.

In other business news, Petro-Canada says it will sell seven natural gas properties in B.C. and Alberta to assorted firms for $270 million.

Internet firm itemus Inc. is up about 7% after it unveiled a merger with privately-held consulting firm Digital 4Sight Corp. that will see itemus issue $22 million in stock to Digital shareholders and make a cash payment of $2 million.

Digital’s chairman is noted new economy expert Don Tapscott, who becomes chair of itemus. Earlier Compaq Canada invested $10 million in itemus.

In New York, stocks are mixed with techs weakening and old economy names up impressively. The Dow is up 195 points to 10,630.

The Nasdaq composite is down 16 points to 2,637. The S&P 500 is up 13 to 1,325.

Hopes for a Fed rate cut seem to be fueling the rally, sparking J.P. Morgan, Citigroup and Amex higher at midday. Techs were up in the pre-market, but after Goldman Sachs issued broad downgrades on dot com stocks, the sector couldn’t help but slump.

Media giant Time Warner is also weak, down 11%, after issuing an earnings warning.

The CDNX is down, too, off 27 points to 2.844 on strong volume of 22.5 million shares. Mining stocks are leading the weakness for a change, off 2.4%, followed by the techs down 1.2% and oils down just a bit. Southport Capital is the top trader, up 100% to 30¢ on 3.4 million shares.