Stocks look weak this morning. Sabre rattling by the Taliban in Afghanistan and fears of the effect of U.S. retaliation has markets very nervous.

Stocks are plunging in Europe, led by airlines such as British Airways plc, and other consumer stocks.

The U.S. dollar is also looking weaker and oil is up, returning to the fearful view first seen in the immediate aftermath of the attack.

The FTSE is down 95 points to 4,849. The CAC 40 is off 137 points to 3,977. The DAX has lost 184 points to 4,209.

Asian markets had bounced back earlier on some optimism, before traders’ worries were stirred. The Nikkei gained 396 points to 10,009. The Hang Seng added 86 points to 9,655.

Normally huge economic news is being ignored this morning. U.S. Producer Prices rose 0.4% in August, with the core rate down 0.1% much as expected.

U.S. retail sales rose 0.3% in the August, the largest increase in the last four months and a sign that spending was strong before the U.S. disaster.

In Canada, weak truck sales caused a 0.5% drop in new motor vehicle sales in July compared with June. This decline followed a 1.5% gain in June.

In July, 133,036 new motor vehicles were sold, about as many as the average monthly sales in 2000, a record year.

In M&A news, Sun Life Financial Services of Canada Inc. has signed a definitive agreement for the sale of its UK subsidiary Sun Bank plc for approximately £95 million to Portman Building Society. Proceeds from the sale of the bank are intended to be used for general corporate purposes.

In other news, Skyjack Inc. announced that it will be extending the shutdown of all of its manufacturing facilities for approximately two to four weeks effective September 17.

The shutdowns are intended to further reduce inventories and expenses in response to the continuing economic slowdown and competitive pressures within the industry.