(Revises first paragraph, updates futures, adds comment)
By Denise Duclaux
NEW YORK, March 19 (Reuters) - Stocks are seen opening flat to slightly higher on a tense Wall Street on Wednesday as investors braced for a U.S.-led military strike against Iraq that could begin in a matter of hours.
"The market seems to be signaling that it is accepting the fact that the U.S. is finalizing and holding true to President Bush's deadline regarding a military operation and ousting Saddam Hussein," said John Person, head financial analyst at Infinity Brokerage Services
European stocks had jumped and U.S. futures clawed into positive ground after Kuwaiti security sources told Reuters that U.S.-led troops had headed into the demilitarized zone (DMZ) that straddles the Iraq-Kuwait border in preparation for an attack on Iraq. A U.S. military spokesman denied the report.
But war appears imminent after U.S. President George W. Bush said his forces will invade if Iraqi President Saddam Hussein does not flee by early Thursday. Hussein has vowed to stay and fight the U.S.-led forces.
"People are assuming the moment of truth is here and that the war is going to go quickly and smoothly," said Peter Boockvar, equity strategist, Miller Tabak & Co. "People think tonight is the night. The only reason tonight would not be the night is if the U.S. military asked for a couple more days.
Equity futures eased off their highs after the U.S. military denied troops had moved into the DMZ but still pointed to a slightly higher open. June futures for the Standard & Poor's 500 gained 3.80 points to 870. Futures for the Nasdaq 100 edged up 0.50 of a point to 1,088, while futures for the Dow Jones Industrial average rose 45 points to 8,215. The Nasdaq 100 pre-market indicator edged down 0.05 percent.
Stocks have rallied as a U.S.-led war on Iraq appears imminent, lifting the cloud of uncertainty dogging the market for months. Investors are betting the war will prove a quick and decisive victory for the United States. The Dow has surged more than 8 percent since its finish last Wednesday when the blue-chip gauge fell close to multiyear lows.
Market watchers warn this week's sessions may be volatile as investors use headlines and rumors to try to determine how the mounting crisis will end. Investors are worried about risks such as Iraq setting its oil wells afire, terror attacks or a U.S. invasion getting bogged down.
WAR NOT THE ONLY WORRY
Concerns remain over the health of the U.S. economy. Consumer sentiment has deteriorated, the labor market is struggling and corporate profit growth is shaky.
"On the corporate front, we are not getting any feathers for the bull's cap today," said Bryan Piskorowski, market commentator at Prudential Securities.
After Tuesday's closing bell, Oracle Corp. , the world's No. 2 software maker, reported year-on-year quarterly profit growth for the first time since late in 2001, but key software sales fell short. Its shares slumped to $11.65 before the opening bell after closing at $12.25.
Semiconductor manufacturer Microchip Technology Inc. sounded another sour note on Tuesday after the close by lowering its fourth-quarter revenue and earnings guidance, saying sales have slowed because of U.S. preparations for a war with Iraq and tensions with North Korea. Shares closed at $23.74.
Corning Inc. , the No. 1 maker of fiber-optic cable, on Tuesday after the close reiterated that it expects sales at its liquid crystal display (LCD) glass business to grow 20 percent to 40 percent annually through 2006. Shares closed at $6.
HealthSouth Corp. -- a provider of physical therapy, diagnostic imaging and outpatient surgery -- said on Wednesday before the open agents of the Federal Bureau of Investigation served it with a search warrant and were given access to financial records. Shares closed at $3.91.
Stocks finished higher on Tuesday after bouncing around break-even for most of the session, as investors weighed hopes that a U.S.-led attack on Iraq would be quick against signs of a sluggish economy.
The U.S. Federal Reserve held interest rates steady and said it could not "usefully characterize" the risks to the economy given the uncertainties that abound.
The broad Standard and Poor's 500 index rose 3.66 points, or 0.42 percent, to 866.45 on Tuesday. The tech-laced Nasdaq Composite Index added 8.28 points, or 0.59 percent, to 1,400.55. The blue-chip Dow Jones industrial average was up 52.31 points, or 0.64 percent, to 8,194.23. (With additional reporting by Doris Frankel)