Stock markets head for weak open

New York futures were little changed ahead of weekly jobless insurance claims data and testimony by U.S. Federal Reserve chairman Ben Bernanke on the health of the U.S. economy.

The Dow Jones industrial futures declined 17 points to 12,636, the Nasdaq futures lost four points to 2,483.5 while the S&P 500 futures were down 1.5 points to 1,318.3.

Bernanke will likely tell the House Budget Committee that the slowly improving economy may need more help from the Fed and that cutting the deficit too fast could backfire.

His testimony will come a week after the Fed signalled that a full recovery could take at least three more years. As a result, the Fed said it doesn’t plan to raise its benchmark interest rate from a record low before late 2014 at the earliest.

And a day before the release of the U.S. non-farm payrolls report for January is released, traders hoped that data would show that applications for unemployment benefits fell to 371,000 last week from 377,000 the previous week.

Stock markets were lifted Wednesday by strong manufacturing data from China and the U.S. and a report from payroll firm ADP that the American private sector created 170,000 jobs last month. Economists were looking for the U.S. economy to have created a total of 150,000 jobs in January.

Employment figures for Canada also come out Friday and economists expect the economy cranked out about 24,500 jobs during January.

Investors also took in some major deal making in the resource sector.

Mining company Xstrata PLC confirmed Thursday that it is in merger discussions with commodities trader Glencore International PLC, a deal that would create an industry giant with around US$175 billion worth of revenues. Xstrata said that Glencore had proposed an all-share merger of equals. Glencore cautioned that there was no certainty of an offer being made.

The merged mining giant would operate businesses around the world, including major nickel mining and refining businesses in Canada, where Xstrata owns the former Falconbridge nickel company.

Crude prices continued to weaken following data Wednesday showing that U.S. oil inventories rose much more than expected last week. The March crude contract on the New York Mercantile Exchange was down 69 cents to US$96.92 a barrel.

Metal prices also backed off with copper down five cents to US$3.80 while gold declined $1.80 to US$1,747.70 an ounce.

Earlier in Asia, Tokyo’s Nikkei 225 rose 0.8% while Hong Kong’s Hang Seng shot up two per cent and Seoul’s Kospi added 1.3%.

European markets were weak as London’s FTSE 100 index dipped 0.15%, Frankfurt’s DAX was off 0.01% and the Paris CAC 40 was up 0.06%.

In earnings news, Dow Chemical says it posted a US$20 million loss in the fourth-quarter because of a one-time charge that caused it to pay higher taxes at its Brazilian operations. The loss of two cents a share compared with a year-ago profit of $426 million, or 37 cents per share. Revenue rose two per cent to $14.1 billion. Dow shares were down about 3.75% in pre-market trading in New York.

Drugmaker Merck & Co. swung to a fourth-quarter profit of US$1.51 billion or 49 cents a share because of lower acquisition and restructuring charges and slightly higher sales. A year earlier, Merck lost $531 million, or 17 cents a share.

Revenue rose 1.6% to $12.29 billion, short of expectations for $12.52 billion and its shares drifted 0.3% lower in pre-market trading.