AMERICAN MARKETS OUTLOOK: U.S. stock markets are set to open down Tuesday, according to Anthony Hill of FSW Securities. "Wall Street's enthusiasm waned by the end of trading yesterday as the momentum (of the first quarter) was unsustainable," he says.

City Index's Tom Hougaard is calling the markets to open flat saying, "the market has been very cautious about selling until all the quarterly results are known. But now the markets have reached some crucial levels, there is a little bit of uncertainty all round."

FSW Europe is calling the DJIA to open down 10 points at 11,134, the S&P to open down 5 points at 1754 and the Nasdaq to open down 3 points at 2333.

EUROPEAN MARKETS: European markets are lower at midday, after profit-taking on Wall Street spilled over across the Atlantic and mining stocks failed to sustain Monday's rally.

London's FTSE 100 is down 0.29% at 6006.9, after the index reversed almost half Monday's gains because of soft manufacturing data in the U.S. that sparked a sell-off on Wall Street. However, the downside was limited by utility Severn Trent, which gained 6.6% at 1200p, having earlier hit a record high of 1220p, after it said that it plans to demerge its U.K. waste management business, Biffa.

Germany's DAX eased 0.18% at 6013.13 on Wall Street's lackluster session, say traders. "But it's a good sign that the market is defending the 6000 mark," says one trader. Given the lack of economic and corporate news, the market will likely be keeping a close eye on the DAX's technical performance for further direction, an analyst says. Continental is up 1.3% after UBS upgraded its target price.

The French CAC was down 0.41% at 5233.49.

Euro government bonds are down after hitting new lows Monday. In the absence of major data releases or events, trading is set to remain driven by technical factors, says ING Bank. It notes two key support levels at 116.90 and 116.50 were breached Monday, leaving Bunds looking oversold relative to the long-end. June bonds are down 0.08 at 116.61, June Gilts are down 0.15 at 111.34.

The dollar is drifting at midday in Europe after a disappointing fall Monday in the latest Institute of Supply Management survey of U.S. manufacturing industry. The survey showed a sharp fall in activity, increasing speculation the Fed will only raise rates to 5% from 4.75%, rather than pushing them as high as 5.25%, as some had expected previously. By 1025 GMT, the dollar was up at Y117.75 from Y117.69 late Monday in New York, the euro was up at $1.2172 from $1.2141, while the pound rose to $1.7455 from $1.7309.

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TOP STORIES:

ARCELOR LAUNCHES DEFENSE AGAINST MITTAL BID: Steel producer Arcelor SA (5786.FR) said it will raise its 2005 dividend, return a further $5 billion to shareholders and restructure its holding in Canada's Dofasco, in what amounts to a defense against a hostile takeover bid from Mittal Steel Co. (MT). (News Snap by Steve McGrath)

EURO-12 PRODUCER PRICES CONTINUE TO CLIMB: The prices of goods leaving euro-zone factory gates rose at the fastest annual rate since November 2000 in February, increasing the likelihood that the European Central bank will hike interest rates soon. (Data Snap by Paul Hannon)

EURO-ZONE JOBLESS RATE LOWEST IN NEARLY 4 YRS: The euro zone's jobless rate fell to its lowest level in nearly four years in February, resuming the gradual downward trend interrupted at the end of last year. (Data Snap by Emily Barrett)

IMF UPS FORECAST FOR GLOBAL ECONOMY IN 06: The International Monetary Fund raised its growth forecast for the global economy to 4.9% for this year from the 4.3% predicted last September, according to an IMF report Tuesday. (By Ditas Lopez)

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INSIGHT & ANALYSIS FROM DOW JONES NEWSWIRES:

=FOREX FOCUS: On the surface, the Bank of Japan's latest Tankan survey was a disappointment, but there is no sign Tuesday that experts are scaling back their projections for a yen-supportive rise in Japanese interest rates. (By Nicholas Hastings)

=CHARTING EUROPE: The euro retested recent highs against the dollar on Tuesday at $1.2175 and should reach a two-month high in the next few days. (By Axel Rudolph)

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STILL TO COME

COUNTRY PERIOD

ET/GMT
0730/1130 US Mar Challenger Layoffs Survey.
0745/1145 US Apr 1 ICSC Store Sales Index.
0855/1255 US Apr 1 Redbook Retail Sales Index.
0930/1330 EU ECB Chief Trichet speaks at joint
Chicago Fed-ECB conference in Frankfurt.
0900/1500 US Treasury Secretary Snow attends the
launch of the National Strategy for
Finance Literacy in Washington.
1000/1600 US Dallas Fed President Fisher speaks on "A
New Perspective on Policy" in Wichita
Falls, Texas.
1045/1645 US Richmond Fed Lacker speaks on the
economic outlook in Parkersburg, W Va.
1700/2100 US Apr 2 ABC/Washington Post Consumer Confidence
Index.
N/A US German Econ Min Glos visits Washington.
===========================

OTHER NEWS:

Lafarge SA (12053.FR) Tuesday bowed to pressure from increasingly vocal minority shareholders and raised its bid for Lafarge North America (LAF) by 9.3% in a move to win full control of North America's largest cement supplier. (News Snap by Greg Keller)

Severn Trent PLC (SVT.LN) said it plans to demerge its U.K. waste management business Biffa and said it expects to deliver full-year profits in line with its previous guidance. (Data Snap by Rod Stone)

Virgin Mobile Holdings (U.K.) PLC. (VMOB.LN) said it has accepted an offer from cable operator NTL Inc. (NTLI) that values the U.K. wireless company at GBP962.4 million. (News Snap by Kay Larsen)

The annual rate of consumer-price inflation fell across much of the developed world in February as the rise in energy prices slowed, according to figures released Tuesday by the Organization for Economic Cooperation and Development. (Data Snap by Paul Hannon)

Lanxess AG (LXS.XE) unveiled a fourth quarter net loss of EUR100 million and announced yet another restructuring plan that it said would ensure that it made a profit in 2006. (News Snap by Gangolf Schrimpf)

U.K. housebuilder Bellway PLC (BWY.LN) posted a 2.4% dip in first-half net profit, in line with analyst expectations, and said reservations were up 10% from a year earlier in the Jan. 31 to March 31 period. (News Snap by Isabelle Oderberg)

Dutch printer maker Oce NV (OCENY) posted a 43% increase in fiscal first-quarter net profit and said the integration of the Imagistics acquisition is "going well." (News Snap by Stefan Simons)

U.K. online gaming company Empire Online Ltd. (EOL.LN) reported a 57% jump in 2005 pretax profit after gaming revenues more than doubled. (News Snap by Anita Likus)

German home improvement store chain Praktiker Bau und Heimwerkermaerkte Holding AG (PRA.XE) said 2005 sales and earnings rose, mainly on successful store openings outside Germany and consistent cost management. (News Snap by George Frey)

Bloomsbury Publishing PLC (BMY.LN) reported a 21% rise in full-year pretax profit but gave no guidance on when the seventh and final book in its blockbuster Harry Potter series of children's books will be released. (News Snap by Athos Larkou)