Source: The Canadian Press

North American stock markets appear set for a muted open after a two-day rally that saw the major indexes rack up some big gains.

There were few major companies scheduled to report earnings Monday. Instead, investors will be keeping an eye on new home sales data for June that will be released midmorning by the U.S. Commerce Department.

Economists are expecting a bump in sales, up 6.7% to an annualized 320,000. This followed a plunge of 32.7% in May to the lowest level since records began being kept in 1963. There has been concern that the market was being propped up by a tax credit for home buyers and it will continue to struggle now that there are fewer incentives.

The September crude contract slumped, losing 73 cents to US$78.25 a barrel on the New York Mercantile Exchange after tropical storm Bonnie petered out when it reached the Gulf of Mexico and didn’t damage any of the region’s oil installations.

The August bullion contract edged up 30 cents to US$1,188.10 an ounce.

The Canadian dollar added 0.04 cent to 96.56 cents US.

Markets racked up some big gains in the latter half of last week, with the Dow Jones adding more than 300 points or 3% in two days, putting it within four points of getting back into positive territory for the year. The S&P/TSX composite index also climbed, although less dramatically than its counterparts in New York.

This followed the results of the so-called “stress tests” of European banks, which found that only seven of 91 banks tested would fail if the economy weakened.

Volatility has dominated markets in recent weeks, with investors weighing mixed earnings out of the U.S. and some less-than-impressive economic data. However, some key companies have impressed with higher-than-expected revenue and bright outlooks, adding to hopes that the global economy is recovering.

Results due out Tuesday from oil company BP PLC will likely be closely watched because of reports that embattled CEO Tony Hayward will step down and the company could take a big charge to cover costs of cleaning up the oil spill in the Gulf of Mexico.

Canadian earnings season will get going in earnest this week and will help give direction to the Toronto stock market.

Ahead of the opening bell, Dow Jones industrial average futures fell 0.2%. S&P 500 index futures fell 0.2%, while Nasdaq 100 index futures also fell 0.2%.

European markets edged lower as investors had their first chance to react to the health of the continent’s big banks.

Britain’s FTSE 100 fell 0.1%, Germany’s DAX index fell 0.5%, and France’s CAC-40 fell 0.3%. Japan’s Nikkei stock average rose 0.8%.