By James Langton

(September 15 – 09:00 EST) – The long-awaited U.S. Consumer Price Index report hit the wire at 08:30 ET, providing some good news to a beaten down market. The CPI came in with a positive spin, erasing a deep skepticism that was creeping over the market. Overseas markets were all negative ahead of the number. S&P futures were deeply down ahead of it too.

Economists were expecting a 0.3% monthly increase, and 0.2% on the core number. They got their 0.3% increase on the headline, but the core number was up just 0.1%. The lower-than-expected core number is feeding the view that the only inflation existing at present is in energy prices. Traders now hope the U.S. Federal Reserve Board won’t be motivated to hike rates at its October meeting.

Statistics Canada is reporting much stronger than expected auto sales for July – up 4%, ahead of expectations of a 2.3% increase.

Ahead of the U.S. CPI data European stocks traded mildly lower all morning. Tech stocks led the weakness, thanks to German giant SAP, and disappointing earnings reported by Oracle after yesterday’s Wall Street close. London’s FTSE 100 is down about 45 points; both the German DAX and French CAC 40 have dropped about the same amount, 44 and 41 points respectively.

Japan’s traders had the day off for a public holiday, but the Yen was trading stronger against the U.S. dollar once again. On this continued currency battle, U.S. rate fears and the lack of Japan’s comforting presence Hong Kong’s traders were jittery overnight. The Hang Seng index sold off strongly, closing down 373 points.

In business news, there are a couple of deals on the schedule. In the U.S. Dime Bancorp Inc., New York’s largest thrift, is merging with Hudson United Bancorp, New Jersey’s second-biggest bank. Motorola Inc., the largest cable modems manufacturer has officially bid US$11 billion for the largest set-top box maker, General Instrument Corp.

Cintech Tele-Management is reporting fully-diluted earnings per share of 32¢ for the year ended June 30, up from 10¢ for fiscal 1998.

For the quarter ended July 31 Transat A.T. Inc. is reporting net income of 26¢ per share, up from 18¢ per share in the period a year ago.