Bomb blasts in Madrid have driven European stocks down during morning trading. The affect of the blast may have some impact on North American markets, however, investors in Canada and the U.S. are waking to positive economic reports, which may brighten the trading picture.

The bombs killed 170 people and wounded hundreds more — the deadliest attack ever by the Basque separatist group ETA. As a result, European markets plunged. In London, the FTSE 100 Index fell 108.7 points to 4,436.8. The Paris CAC dropped 138.24 points, and Frankfurt’s XETRA DAX slid 141.65 points.

But here at home, Statistics Canada is reporting that industrial capacity utilization recorded its biggest jump in almost a decade in the fourth quarter with the recovery of exports and a red-hot residential construction market. Industries operated at 82.9% compared with 81.3% in the third quarter. This was the largest quarterly gain since the second quarter of 1994, when the rate also increased by 1.6 percentage points, reaching 82.4%.

Meanwhile, U.S. retail sales posted their biggest gain in three months during February, driven by strong demand for motor vehicles, says the U.S. Commerce Department. Retail sales advanced 0.6% last month, says Commerce. Sales were boosted by a 2.7% increase in demand at motor vehicles and parts dealers. That followed a 3% drop in December.

It was the largest advance in the sector since last March. Excluding auto-related buying, overall retail sales would have been flat. Without gasoline and auto sales, retail sales would also have been unchanged. Analysts were expecting an increase in overall sales.

Late Wednesday, Nortel announced that it is delaying its 2003 audited financial report. The company may restate previous financial results. Nortel stock has fallen more than 12% in European trading.

Asian markets took a cue from yesterday’s declines on Wall Street, extending recent losses. Tokyo’s Nikkei plunged 136.2 points, or 1.19%, to close at 11,297.04. Hong Kong shares sank for a third consecutive session. The Hang Seng Index fell 190.14 points, 1.4%, to 13,024.06.

On Wednesday, North American stock indexes sustained triple-digit losses in a third straight losing session as investors fretted a ballooning U.S. trade deficit. Ironically, in light of today’s positive U.S. data indicating increased auto buying at home, a big part of the deficit resulted from decreased exports in autos and auto parts.

New York’s Dow Jones industrial average tumbled 160.07 points to 10,296.89. The Nasdaq composite fell 31.01 points to 1,964.15. The S&P 500 index dropped 16.69 at 1,123.89. In Toronto, the S&P/TSX composite to a 164.89-point loss to 8,585.42.