Stocks are expected to open lower Friday, as a today’s weak U.S. economic data heightens worries about deflation.

According to the consumer price index, prices suffered the biggest drop in 19 months. The consumer-price index fell 0.3%, after a 0.3% increase in March, the U.S. Labor Department said.

The drop was mostly due to energy prices, which fell for the first time since December. The core index, which excludes food and energy items, held steady for a second consecutive month.

The University of Michigan consumer confidence index is due out later this morning.

Also Friday, the U.S. Commerce Department reported housing starts fell by 6.8% in April, after rising 8.3% in March. Economists had predicted a decline of 3.1%.

There are no major economic releases from Statistics Canada today.

Meanwhile European indexes are trading higher. In London, the FTSE 100 is up 1.4%, or 57.2 points to 4,068.3. The German DAX index is up 36.08 points to 3025.46, and in Paris, the CAC 40 is up 33.82 points, or 1.1%, to 3,029.8.

Asian markets closed lower overnight with the Nikkei down 6.11 points to 8,117.29, while the Hang Seng index was off 32.89 at 9,093.18.

The Canadian dollar is trading at US72.53¢ up 0.20 of a cent from Thursday night when stocks closed higher despite a mixed bag of economic reports from south of the boarder.

In the news on Thursday, a monthly survey from the Investment Funds Institute of Canada saw mutual fund redemptions in April up $1.6billion, the second worst month on record, with most investors redeeming from money market funds.

As well, the Canada Pension Plan reported a $1.1billion loss and Nav Canada proposed a 6.9% fee hike for airline travel. The reports come as other analysts voice concerns about a tapped out consumers, and Statistics Canada reported rising inventories in a relatively flat monthly manufacturing report.

In earnings news, HSBC announced Friday its first quarter results and recorded net income of $73 million for the quarter ended 31 March 2003, a decrease of $3 million, or 3.9%, from $76 million for the same quarter of 2002.

The company’s total assets were $35.4 billion at March 31, 2003 compared to $33.9 billion a year earlier and $35.2 billion at Dec. 31 2002.