Another bit of good news on Canadian economic strength came out of Statistics Canada Wednesday morning, with a report that merchandise exports rose 1.3% to just under $35 billion and imports fell 1.3% to $30 billion.

Canada’s trade surplus with the rest of the world bounced back to $4.9 billion in January, after falling for two consecutive months.

Exports to the European Union, which accounted for 6.2% of the total, rose 27.2% to $2.2 billion. Exports to the United States, 84% of the total, were virtually unchanged at $29.3 billion. As a result, Canada’s trade balance with the rest of the world rose from $4.1 billion in December to $4.9 billion in January.

Strong energy exports and a half-billion dollar turn-around in aircraft exports contributed to the largest single monthly jump in exports in six months. Import declines occurred in automotive products and in machinery and equipment, the two largest import sectors.

There was some marginally good trade news for Americans, today, too. The Department of Commerce is reporting that the U.S. trade deficit narrowed in January as foreign demand for American-made goods picked up. But the deficit was still the second-highest level on record.

The deficit in international trade in goods and services narrowed to US$41.11 billion in January. December’s record deficit was revised to US$44.88 billion from US$44.24 billion. Economists had expected the deficit to narrow to only US$43.3 billion for the month. But despite the improvement, the deficit is still high.

So far, pre-market futures trading have not really reacted to the trade numbers. Futures trading is mostly flat.

An item that may move markets, at least in Canada, is the announcemnt that the U.S. Food and Drug Administration is siding with the pharmaceutical industry, and abandoning its relaxed view of Americans flocking to Canada for cheaper medication. The FDA is threatening legal action against insurance companies hose who enable the practice.

Meanwhile, in business news, Talisman Energy Inc. has completed the sale of its interest in the controversail Greater Nile Oil Project in Sudan. The aggregate amount realized by Talisman and its subsidiaries from the transaction was approximately $1.13 billion.

Overseas, markets are reacting mostly to continued to war concerns and the continued divide on the U.N. Security Council. The London Stock Exchange is leading overseas markets down as British Prime Minister Tony Blair struggles against a potential caucus revolt ahead of a United Nations Security Council debate on Iraq.

The FTSE 100 index is down 3.6%, losing 122.4 points to 3,330.3. The German DAX index is down 2.75% at midday. The Paris CAC-40 has declined 2.3%.

In Asia, Japan’s benchmark index bounced back from a 20-year low. The Nikkei average climbed 80.61 points overnight to 7,943.04. The Hang Seng finished up slightly.