9:00AM U.S. stock futures traded lower following overseas weakness.
U.S. stock market futures were trading in the negative territory Monday morning, reflecting inflation concerns and declines in overseas markets, with the Japanese Nikkei down 2.3% and London FTSE 100, down 0.4%. Several multibillion-dollar acquisition deals failed to offset the negative mood.

In the largest deals, Freeport-McMoRan (FCX: chart) agreed to acquire Phelps Dodge (PD: chart) for $26 billion and The Blackstone Group offered $20 billion for Sam Zell''s Equity Office Trust. Freeport-McMoRan shares fell 3.3% to $55.50, while Phelps Dodge shares surged 30% to $123.05 in pre-open trading.

Blackstone agreed to buy Equity Office (EOP: chart) for $20 billion, or $48.50 a share, including debt assumption which makes it the largest ever private equity buyout. The deal represents an 8.5% premium to Friday''s closing price. The stock tacked on 7% to $47.85. In another deal, Nasdaq Stock Market (NDAQ: chart) made its second bid for the LSE in a deal worth $5.1 billion to create a trans-Atlantic giant to compete with the New York Stock Exchange''s acquisition of the four Euronext exchanges. The offer represents a premium of 54% on LSE''s closing share price March 10, the day before the LSE said it had received a bid. The stock tacked on 2.5% to $37.50 in the pre-open. Further in the merger-and-acquisition news, Bank of America (BAC: chart) agreed to buy U.S. Trust from Charles Schwab (SCHW: chart) for $3.3 billion, The Wall Street Journal reported. Schwab shares rose 2.9% to $19.08 in pre-open trading. Russia''s Evraz agreed to buy Oregon Steel Mills (OS: chart) for $2.3 billion, or $63.25 a share, in cash.

In other news, Credit Suisse upgraded Microsoft (MSFT: chart) to outperform from neutral, citing increased confidence in earnings estimates. Microsoft shares rose 0.6% to $29.56. S&P 500 futures dropped 2.30 points at 1,402.50 and Nasdaq 100 futures were down 5.75 points at 1,801.00. Dow industrial futures fell 13 points to 12,355.


8:00AM Freeport-McMoRan Copper & Gold Inc. agreed to buy Phelps Dodge for $25.9 B.
Freeport-McMoRan Copper & Gold Inc. agreed to acquire copper miner Phelps Dodge Corp. (PD: chart) in a $25.9 billion cash-and-stock deal that will create the world''s largest publicly traded copper company Freeport-McMoRan valued its offer at $126.46 per share, 33% premium over the $95.02 closing price for Phelps Dodge shares in Friday trading on the Nymex. Each Phelps Dodge share would be exchanged for $88 in cash plus 0.67 of a common share of Freeport-McMoRan. Shareholders and regulators are expected to approve the deal by the end of Q1 of 2007.

Of the transaction total price, $18 billion will be paid in cash and Freeport-McMoRan said it would issue 137 million shares to Phelps Dodge shareholders. That would give them about 38% of the combined company on a fully diluted basis. J.P. Morgan and Merrill Lynch have committed to funding the cash portion of the transaction, which will boost its total debt by year-end to about $17.6 billion. The merged companies will operate under the Freeport-McMoRan Copper & Gold name, though businesses operating as Phelps Dodge will continue to do so. The combined company''s headquarters will be in Phoenix.

In October, Phelps Dodge reported a sharply higher Q3 profit to $888 million, or $4.36 per share from $366.1 million, or $1.81 per share a year ago. Freeport-McMoRan more than doubled its Q3 earnings to $350.7 million, or $1.67 per share, compared with $165.8 million, or 86 cents per share a year earlier.


7:30AM Asian markets dropped on Monday as Japanese stocks lost ground.
Asian markets were mostly lower on Monday. The Nikkei 225 Index in Tokyo dropped 2.3% to finish at 15,725.94. Mizuho Financial Group fell 3.1%, Matsui Securities dropped 8.4% and personal lender Promise declined 6.2%. Oil company Inpex Holdings shed 3.4% and machinery maker Ebara sank 3.7%.

Hong Kong shares ended lower taking their cue from Japan. The Hang Seng Index fell 1.2% to 18,954.63. China Mobile fell 2.7%, even after reporting strong growth in new subscribers in October. HSBC declined 0.9%, continuing falling for the sixth time in seven days due to poor results from its U.S. units. Bucking the trend, Bank of China rose 1.1% and China Construction Bank rose 1% on the bullish view on the mainland banking sector.

The Korea Composite Stock Price Index, or Kospi, also fell 0.7% to 1,402.21. Kookmin Bank declined 0.3% and Korea Exchange Bank, or KEB, lost 1.6%. A weak won hurt exporters such as Hyundai, the largest auto maker by sales in the country, which fell 2.3%. In Shanghai, a stronger currency boosted banking shares. The benchmark Shanghai Composite Index advanced 2.3% to 2,017.28.

Australia S&P/ASX 200 Index declined 1.8% 5,322.40, even as shares in Telstra sold by the government soared on their market debut, with investors lured by the large yield on offer. Taiwan Taipei Weighted Price Index also finished flat at 7,261.48 and Singapore Straits Times Index shed 1.5% to end at 2,771.41.


6:30AM European markets fall Monday on auto, banks and oil shares.
European markets were lower on Monday. By mid morning, London FTSE 100 lost 0.5% to 6,159, 1.Frankfurt Xetra Dax fell 0.5% to 6,379.62, the CAC 40 in Paris shed 0.8% to 5,397.75.

Decliners

Carmakers were on the decline. Porsche was set to make an offer for its rival Volkswagen but press reports in Germany on Monday, said Porsche did not plan to make a full takeover of VW in spite of building up a 29.9% stake. Volkswagen shares were fell 0.2%, while Porsche fell 1.1 %. Fiat of Italy fell 1.6%, while Peugeot lost 1.4% and domestic rival Renault shed 1.3%.

Total of France down 1%, while Repsol YPF of Spain fell 1% and Royal Dutch Shell, the Anglo-Dutch producer, lost 1%.

ITV of Britian led the media sector lower after investors feared stakebuilding by rival UK broadcaster BSkyB would put off potential bidders. ITV fell 2%, while BSkyB shed 1.5%.

French media group Vivendi fell 0.8% after the company announced that bid talks with Kohlberg Kravis Roberts had ended.