Wall Street futures are weak Tuesday morning pointing to a poor start for equities. In the U.S. investors are still struggling with the costs of the Bush government’s request for new spending in Iraq, which is estimated to increase the American federal deficit to over a half trillion dollars.

North of the border, housing starts rose by an unexpected 4.7%. Economists are having a hard time explaining the disconnect between this number and recent poor employment figures, so any impact of the housing numbers on the markets is bound to be minimal.

In Europe at midday, the Frankfurt DAX is down 0.6%. Paris has declined 0.5% and London’s FTSE 100 index is off 0.5%.

Government officials have confirmed a Singaporean had contracted severe acute respiratory syndrome, the first case of SARS since the disease was declared under control in June. That news knocked Hong Kong’s Hang Seng index down 1.1% overnight.

Tokyo’s Nikkei stock average followed Monday’s rally on North American markets. It rose 238.28 points, or 2.2%, to 10,922.04 – the highest close since July 9, 2002. The increase was also influenced by Morgan Stanley raising its recommendation of exposure to Japanese stocks from “neutral” to “overweight.”

On Monday, the Toronto composite index rose for the fifth straight session, up 23.51 points to 7,636.01. The Dow Jones industrial average gained 82.95 points to 9,586.29. The Nasdaq climbed 1.6% to an 18-month high, gaining 30.38 points to 1,888.62. The S&P 500 index was up 10.25 at 1,031.64.