The market mood is mixed Wednesday as American-led forces continue to face obstacles in Iraq and U.S. President George W. Bush faces opposition back home. Yesterday the U.S. Senate voted to cut Bush’s proposed tax cut in half.

The action was was partly driven by concern over war costs. And in part, the U.S. senators are concerned about the growing American deficit which could reach 4% of GDP per year within the next five years.

During the Senate debate, economic studies were cited which questioned the efficacy of the tax cut plan as a stimlus for growth.

Meanwhile, the U.S. Dept. of Commerce reported Wednesday that orders for big-ticket items , known as “durable goods,” dropped last month. The overall number fell 1.2% to $170.24 billion in February. Economists anticipated the drop in orders, forecasting a steeper 1.5% decline.

Here at home, Statistics Canada is reporting more good news. Assets held by Canadians in the form of direct investments abroad rose to $431.8 billion, up 10.8% from 2001. This rate of growth was, however, slower than the 14.6% average over the past 10 years.

Ultimately, neither of these economic indicators is likely to move the market much as most traders and investors have their eyes glued to TV war coverage. War volatility is equaling equity uncertainty.

Overnight, the Nikkei Stock Average closed up 113.16 points, or 1.37%, at 8,351.92 points. However, Hong Kong’s Hang Seng index fell 0.17%.

In Europe markets seem more hopeful. London’s FTSE 100 index has gained 38.9 points, or 1%, to 3800.9 in early afternoon trading. Frankfurt’s Xetra DAX index is up 35.41 points, or 1.3%, to 2671.51. Paris’s CAC 40 index is up 41.64 points, or 1.5%, to 2837.43.

However, the early morning futures trading is trending lower, pointing to a cautious start to the North American trading day.