AMERICAN MARKETS OUTLOOK: U.S. stock markets are set to open up Monday, but Angus Campbell at spreadbettor Finspreads warns that stocks could remain volatile ahead of Thursday's Federal Reserve rate decision. Investors will focus Monday on U.S. May new home sales, due at 1400 GMT, for indications that growth is under threat from a slowing housing market, he adds.

Campbell says the data are "a crucial segment of the economy" because they "signal changes in consumer spending patterns that are indicative of economic activity."

Finspreads is calling the Dow Jones Industrial Average to open up 30 points at 11,020, the S&P 500 to open 3 points higher at 1247.5 and the Nasdaq 100 to open up 2 points at 1553.

EUROPEAN MARKETS: European markets are little changed midday and trading in a tight range as investors wait for clues on U.S. interest-rate direction ahead of Thursday's Federal Reserve meeting.

London's FTSE 100 is up 0.11% at 5698.20, boosted by mining stocks such as BHP Billiton and Rio Tinto after Phelps Dodge said that it has agreed to buy Canadian miners Inco and Falconbridge in a $56 billion deal that sparked consolidation hopes in the sector. However, gains were limited after oil majors Royal Dutch Shell and BP fell as crude oil fell back below $71 a barrel.

Frankfurt's DAX is up 0.14% at 5537.30 making a small technically driven recovery after last week's losses, say traders. But sentiment remains cautious with the Fed's interest rate decision looming, says one trader. Salzgitter is up 1.5%, supported by Mittal and Arcelor's merger deal.

France's CAC 40 is up 0.15% at 4824.66.

A round of swaps-related selling and some above-consensus German CPI numbers have wiped out gains in the bund future, traders say. At 1025 GMT, September bunds were down 0.04 at 115.10. June gilts were down 0.05 at 108.53.

The dollar is down in Europe after hedge fund selling eroded early gains. By 1025 GMT, the dollar was down at Y116.30 from 116.58 late Friday, the euro was up at $1.2570 from 1.2508, while the pound rose to $1.8210 from $1.8178.

===========================

TOP STORIES:

MITTAL STEEL DEFENDS GROUND CEDED IN ARCELOR DEAL: Mittal Steel Co. (MT) defended the ground ceded in its agreed revised takeover offer for Luxembourg-based steelmaker Arcelor SA (5786.FR), saying the deal wasn't a reverse takeover of Mittal by Arcelor. (By Jackie Range)

EURO-ZONE CURRENT ACCOUNT BALANCED IN APRIL: The euro zone's current account was balanced in April, as improved trade in services helped repair the previous month's deficit. (By Emily Barrett)

GENERALI AGREES TO BUY RIVAL TORO FOR EUR3.85B: Italy's largest insurer Assicurazioni Generali SpA (G.MI) said it is offering EUR3.85 billion in cash for Toro Assicurazioni SpA (TORO.MI) and will suspend its share buyback to snap up its smaller rival. (By Sabrina Cohen and Jennifer Clark)

============================

INSIGHT & ANALYSIS FROM DOW JONES NEWSWIRES:

=FOREX FOCUS: After nearly six weeks of trying, the Canadian dollar is still failing to crack through resistance at C$1.10 to the U.S. currency. (By Nicholas Hastings)

=CHARTING EUROPE: Most European equity indexes briefly broke above their Friday inside-day highs Monday morning and should rise further this week, provided they don't fall beyond Friday's inside-day lows. (By Axel Rudolph)

=FOCUS: Soaring energy prices and gas supply wobbles such as Russia's spat with Ukraine see Western aluminum producers faced with increasingly tough decisions on competitive greenfield smelter investments. (By Elisabeth Behrmann)

=THE SKEPTIC: So Lakshmi Mittal's "monkey money" has turned out to be good enough for Arcelor's board after all. (By Matthew Curtin)

=THE SKEPTIC: As some would have it, Africa has entered another age of colonialism - this time at the hands of the Chinese. (By Robb M. Stewart)

===========================

STILL TO COME

COUNTRY PERIOD

ET/GMT
0900/1300 US Assistant Treasury Secretary Henry speaks
on systemic risk and GSE reform.
1000/1400 US May New Home Sales.
1030/1430 US Jun Dallas Fed Mfg Production Index
1115/1515 US Treasury Spokesman Fratto gives weekly
briefing.
===========================

OTHER NEWS:

Russian oil company OAO Rosneft is expected to raise $8.5 billion to $11.65 billion in its initial public offering, according to a Morgan Stanley document. (By Paricia Bass and Benoit Faucon)

U.K.-based airline group Virgin Atlantic Ltd., owned by Singapore Airlines Ltd. (S55.SG) and Richard Branson's Virgin Group (VGN.YY), said its fiscal year pretax pre-items profit more than doubled to GBP41.6 million, from GBP20.1 million. (By Steve McGrath and Rod Stone)

Sentiment among French entrepreneurs slipped in June amid weaker demand from overseas' customers and higher-than-usual stocks in the country's large auto sector, a business survey released by national statistics agency Insee showed. (Data Snap by David Gauthier-Villars)

Consumer prices in the western German state of Hesse have risen once again in June, owing to continued high energy bills and more expensive holiday accommodation. (Data Snap by Michelle Schmitz)

Consumer prices in the German state of Bavaria rose more strongly than expected in June thanks to higher costs for package tours, hotel accommodation and restaurants, the state statistics office said. (Data Snap by Holly Dotterer)

Housebuilder Persimmon PLC's (PSN.LN) executive chairman John White said the company's GBP643 million acquisition of peer Westbury early this year has allowed it to make "good progress" on social housing. (By Henry Teitelbaum)

United Business Media PLC (UBM.LN) said its PR Newswire and events businesses are "performing well" and revenues from its online businesses are growing strongly but its print titles are seeing "continuing challenges." (By Jessica Hodgson)

Independent News & Media (INWS.DB), said it expected total revenue growth of 3% for its first half and was looking forward to double-digit earnings growth for its full year. (By Jessica Hodgson and Quentin Fottrell)

Stanley Leisure PLC (SLY.LN) and London Clubs International PLC (LCI.LN) said they are discussing a possible merger which would create a dominant force in the U.K. casino sector. (By Michael Carolan)

Danish hearing aid maker William Demant A/S (WDH.KO) upgraded for the second time in two months its full-year outlook, on the back of a successful product launch, and said it expects to take additional market share in 2006. (By Frances Schwartzkopff)

Private equity group Permira urged shareholders of hotel and leisure conglomerate De Vere Group PLC (DVR.LN) to "take no action" while Permira considers whether to make an offer higher than the one agreed between De Vere and Alternative Hotels Group Venice Ltd. (By Anita Likus)

Swiss retail sales fell 1.2% on the year in April, and were down 0.7% when adjusted for inflation, the Swiss Federal Statistics office said. (Data Snap by Hans Schoemaker)

UBC Media Group PLC (UBC.LN) launched the first trial of a digital music download service that will allow consumers to download music directly from the radio set or mobile phone. (By Jessica Hodgson)