U.S. MARKET AVERAGES

Stock futures predict Friday opening above the flat level. Markets are eagerly awaiting the consumer price index, expected to show a 0.9%t increase last month. The data will reflect conditions after the two powerful hurricanes Katrina and Rita hit the oil production facilities in the U.S. Gulf Coast, so worries about inflation and interest rates increases are likely to dominate trading.

The pre-market sentiment was lifted by strong third-quarter earnings report from General Electric, which came in line with analysts’ expectations. Another boost came from the British-based Hilton Group which confirmed that it is selling its hotels to North American Hilton Hotels Corp for $6.3 billion.

S&P 500 futures were up 2.5 points and slightly above their fair value. Dow Jones industrial average futures were up 20 points, while Nasdaq 100 futures were up 4.5 points.

ECONOMIC NEWS

Consumer prices rose particularly sharply in the month of September, according to a report from the Department of Labor, with the increase exceeding economist estimates. The sharp rise in prices was largely due to a significant increase in energy prices.

The Labor Dept. said that consumer prices rose 1.2 percent in September after rising 0.5 percent in each of the two previous months. Economists had been expecting a somewhat more modest increase of about 0.9 percent.

As mentioned above, the increase in consumer prices was largely due to a sharp rise in energy prices, which rose 12.0 percent in September following a 5.0 percent increase in August. The increase reflects the surge in energy prices that was seen following Hurricane Katrina.

The sharp rise in energy prices contributed to a significant increase in transportation prices, which rose 5.1 percent in September after rising 2.2 percent in August. Prices for education and communication also showed a notable increase.

Excluding food and energy prices, core prices rose by a much more modest 0.1 percent in September, extending a recent trend. Economists had expected core prices to increase by about 0.3 percent.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mostly in the negative territory on expectations of U.S. inflation data and speculations over interest rates increases. The Nikkei lost 0.2%. Across the region, Hong Kong’s Hang Seng fell 1%, South Korea’s Kospi shed 0.3%, and Australia’s All Ordinaries slipped 0.5%.

European markets traded lower at mid-day, posting modest losses as investors were cautious ahead of U.S. consumer prices data. A strong support to the market sentiment was provided by the British-based Hilton Group, which advanced after confirming that it is in talks to sell its hotels to North American Hilton Hotels Corp for $6.3 billion. The German DAX 30 shed 0.1%, the French CAC 40 lost 0.2%, and London’s FTSE 100 slipped 0.1%.

ENERGY, METALS, CURRENCIES

Oil prices sharply dropped below $62 a barrel on lower gas and distillates demand. Light sweet crude for November delivery slipped $1.12 to $61.96 a barrel on the Nymex.London Brent fell 60 cents to $59.54.

In European trading gold prices slid. In London gold December contract traded at the recommended price of $469.50 per troy ounce, down from $470. In Hong Kong gold fell 70 cents to close at $470.75. Silver opened at $7.68, down from $7.71.

In European trading the U.S. dollar traded mixed against its major counterparts. The euro was quoted at $1.1997, up from $1.1989. The dollar changed hands at 114.74 yen, up from 114.71. The British pound was trading at $1.7499, down from $1.7538.

EARNINGS NEWS

General Electric Co. (GE: chart), supplier of electricity, posted Q3 profit of 44 cents a share, up from 38 cents a share in the year-ago period on a 9% sales increase, matching analyst estimate The company forecasted that Q4 earnings would be 56 cents to 58 cents a share.

Knight Ridder (KRI: chart) reported Q3 net earnings of $3.56 per share, up vs. 99 cents in the year-ago period. The results included $207.9 million, or $2.92 per share, from earnings on the sale of the company's interest in Detroit Newspapers, the Detroit Free Press and the Tallahassee Democrat, and 2 cents as a result of classifying these entities as discontinued operations.