Markets are trading higher Friday, as investors appear to be growing more optimistic over how a war against Iraq could pan out. They have largely ignored today’s dismal consumer confidence data. The S&P/TSX composite index is up 37 points to 6,333.

Toronto volume is decent at 87.8 million shares, with the buying ahead of the selling by a margin of 11:5. Market breadth is also positive, as winners outpace losers 3:22.

Gold stocks are leading the charge higher; the TSX gold group is up almost 5%.

There is a 2.4% gain in materials stocks, and strong action in financials, techs, real estate and health care.

Energy stocks are slumping, down about 2%. Petro Canada is down 2.7% and EnCana has dropped 1.8%, both in heavy trading.

Canadian Natural Resources, Suncor Energy, Precision Drilling, Baytex Energy, Talisman Energy and NCE Petrofund are weaker, too.

Other notable losers include Maple Leaf Foods, Newfoundland Capital and Hemosol. Hemosol is getting hammered, down 64% on its latest clinical results.

Most everything else is higher. Kinross is leading the golds with an 8% gain. There is also strong flight to safety action in Wheaton River Minerals, Placer Dome, Barrick, and Agnico Eagle.

Banks are also powering higher, with TD Bank leading the way with a 2.7% gain. CIBC is up 2%, and there is strength in Royal Bank, Manulife Financial and Bank of Montreal.

BCE is up 1% at midday. Nortel is up 1.6% in active trading, followed by an 8% rise in Research in Motion, and strength in Zarlink. Falconbridge and Biovail are up, too.

In New York, markets zoomed to a triple-digit gain at the open, driven by hope of progress toward peace between Palestinians and Israelis. However, traders have since backed away amid a very fluid political situation.

The Dow Jones industrial average is still clinging to a 36 point gain at 7,857. The S&P 500 is two points higher at 834. The Nasdaq has now dropped off a point to sit at 1,340.

The small caps are also holding a modest rally, up six ticks to 1,062. Volume is on the light side at 15 million shares. Spider Resources is the day’s top trader, flat at 8¢ on 878,000 shares.