Futures markets are trading higher Thursday on the news that American forces are edging toward Baghdad, inspiring optimism that the invasion of Iraq may be over soon.

Back home, though, the U.S. economy is showing the strain of uncertainty. The U.S. Department of Labor is reporting that initial jobless claims surged last week to an 11-month high.

First-time applications for unemployment benefits rose by 38,000 to 445,000 last week, a huge jump from 407,000 the previous week. Analysts expected no more than 410,000. All of these numbers are above the comfort zone of 400,000. Even accounting for reservists being called up, this number is alarming.

The U.S. Institute of Suplly Management’s index on non-manufacturing activity, such as the service sector, is due out later this morning. Economists are not expecting the news to be good.

The Toronto market is likely to be affected by Bombardier’s decision to sell its Ski-Doo division and seek more financing. Bombardier announced it is selling the division that launched the company more than 50 years ago. It’s issuing new shares in a broad restructuring. After reporting a $615-million loss for 2002, on Wednesday, Bombardier lost 24 cents to $3.24 on Wednesday.

In Europe, trading is more in sync with the American futures markets, rising on hope of a conclusion to the hostilities in Iraq.

London’s FTSE 100 index rose 47.3 points, or 1.3%, to 3800.7. Paris’s CAC 40 index gained 81.11 points, or 3%, to 2824.99. Frankfurt’s Xetra DAX index gained 50.44 points, or 2%, to 2639.79, having jumped 5.7% Wednesday.

Meanwhile, the European Central Bank is more cautious. It maintained its central rate at 2.5%, while it awaits the outcome of the war.

Asian markets didn’t fare well overnight. Merrill Lynch has downgraded the Asian region based on the impact of the SARS scare. Tokyo’s Nikkei Stock Average slipped 52.1 points, or 0.65%, to 8,017.75. Hong Kong’s Hang Seng Index fell 58.03 points, or 0.7%, to 8,648.16.