Stock futures point to lower opening

[June 22, 2010]  NEW YORK (AP) -- Fresh concerns about Europe's sovereign debt crisis rattled markets Tuesday. Stock futures fell modestly after the ratings of a major European bank were cut.

Fitch Ratings slashed its view on BNP Paribas SA, the largest bank in the eurozone by deposits. That has renewed worries that plagued global markets in recent months. Traders are concerned that mounting sovereign debt across Europe, particularly in Greece, Spain and Portugal, would disrupt a global economic recovery and lead to a fresh round of losses for banks holding that government's debt. Banks around the globe were hammered with losses during the credit crisis in late 2008.

If caution grows among banks because of worries about sovereign debt, that could slow lending to companies and consumers during a time when access to credit is already tight.

The euro, used by 16 countries in Europe, resumed its fall against the dollar after rising for eight of the past 10 days. The euro fell to $1.2285.

The drop in futures and the euro comes as the U.S. Federal Reserve opens a two-day meeting where it is expected to keep a key interest rate at historic lows. That move is intended to stimulate growth as a domestic recovery moves slowly.

High unemployment and weakness in the housing market have been two reasons a rebound has been slow and unsteady, though it has allowed the Fed to keep rates low. A new report due out Tuesday is expected to show sales of previously occupied homes rose in May, though sales could fall in the coming months now that a home buyer tax credit has expired.

The National Association of Realtors is expected to say existing home sales rose 6.1 percent in May to a seasonally adjusted annual rate of 6.12 million, up from 5.77 million in April, according to economists polled by Thomson Reuters. The report is due out at 10 a.m. EDT.

Ahead of the opening bell, Dow Jones industrial average futures fell 23, or 0.2 percent, to 10,373. Standard & Poor's 500 index futures fell 3.40, or 0.3 percent, to 1,107.10, while Nasdaq 100 index futures fell 9.50, or 0.5 percent, to 1,890.00.

Stocks fell late Monday, giving up early morning gains as enthusiasm for China's decision to let its currency appreciate against the dollar waned. The Dow ended the day down 8 points after rising almost 144 points earlier in the day. Broader indexes also gave up early gains.

Excitement fizzled as investors came to see the move as a long-range shift in policy and not something that could provide a short-term spark for the economy. The move could eventually be a boost for U.S. manufacturers and exporters because their goods would be more competitive in China's fast-growing economy.

Meanwhile, bond prices rose Tuesday as investors opted for the safety of U.S. Treasurys. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.22 percent from 3.25 percent late Monday.

Overseas, Britain's FTSE 100 fell 1.5 percent, Germany's DAX index dropped 0.9 percent, and France's CAC-40 fell 1.1 percent. Japan's Nikkei stock average fell 1.2 percent.

[Associated Press; By STEPHEN BERNARD]

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