Stocks are set to open flat Monday as the threat of war in Iraq continues to affect investing sentiment. The early morning futures markets have been up and down.

In Canada, housing starts were down in January, below analyst expectations — reflecting an attitude of caution among Canadians. The seasonally adjusted annual rate of housing starts in Canada in January was 183,200, which is 8.7% lower than December 2002’s revised rate of 200,700 units.

Major U.S. data on retail sales and unemployment is due out later this week.

Investors will be looking for a crucial report from U.N. weapons inspectors later this week. Meanwhile, in Europe, the mood in Europe is also one of caution amid growing uncertainty about the timing of possible U.S.-led military action against Iraq. Over the weekend, Washington dismissed an initiative by France and Germany to slow the beat of war drums by extending UN weapons inspections in Iraq.Today, France Belgium and Germany have provoked the US again by blocking a plan to boost Turkey’s defences if war occurs.

At midday in Europe the German Dax is up 6.92 to 2,576.20. The Paris CAC 40 is down 5.36 to 2,791.50. London’s FTSE is up 20.80.

Overnight markets in Asia are up. The Heng Seng added 81.10 climbing to 9,232.10. The Nikkei closed up closed up 36.77 at 8,484.93.