Stock futures retreat on overseas concerns

[November 16, 2010]  NEW YORK (AP) -- Stock futures fell Tuesday following new worries about rising inflation in Asia and the possibility Ireland might need a bailout.

Asian markets fell overnight after South Korea's central bank raised interest rates to curb growing inflation. There has been speculation in recent days that China will have to take similar steps soon.

Investors will receive a report on inflation in the U.S. at the wholesale level later Tuesday. It is expected to show that the producer price index rose 0.8 percent in October, double September's growth. However, excluding volatile food and energy costs, costs are likely to rise 0.1 percent, matching September's increase.

Increasing interest rates would not only act to slow inflation, but also to slow rampant growth in Asia. The moves stand in stark contrast to the U.S., which has been trying to drive interest rates even lower to spark growth, which has been sluggish.

Asian economies have been expanding rapidly while the U.S. and much of Europe have been slow to recover from a global recession. The strength in Asia has helped many companies post big profits. So any potential for a slowdown in Asia without further expansion elsewhere could cut into earnings, which hurts stocks.

While Asian countries are dealing with strong growth, European finance ministers are meeting Tuesday. They are expected to discuss a potential bailout for Ireland, which is the latest country to struggle with mounting government debt. Similar problems in Greece earlier this year hurt stocks worldwide as its government received aid to help cover debt problems.

Major European indexes fell Tuesday and the dollar again strengthened against the euro. The dollar is hovering near its highest level against the euro since late September.

Ahead of the opening bell, Dow Jones industrial average futures fell 76, or 0.7 percent, to 11,097. Standard & Poor's 500 index futures fell 7.80, or 0.7 percent, to 1,188.00, while Nasdaq 100 index futures fell 20.50, or 1 percent, to 2,107.50.

Britain's FTSE 100 fell 1.5 percent, Germany's DAX index dropped 0.8 percent, and France's CAC-40 fell 1.6 percent. Japan's Nikkei stock average fell 0.3 percent, while Hong Kong's Hang Seng fell 1.4 percent.

In corporate news, Home Depot said expense controls helped its earnings jump 21 percent. Sales growth remains slow though as consumers avoid major purchases with the economy still weak and unemployment high.

General Motors is expected to raise the price range for its common stock to $32 to $33 when it launches an initial public offering Thursday. Strong demand for the shares has led the automaker to raise the IPO price from a range of $26 to $29.

The higher price would help the government recoup more of the taxpayer-finance bailout that General Motors received.

Meanwhile, Treasury yields retreated from a three-month high as investors moved into the safety of bonds. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.92 percent from 2.95 percent late Monday.

[Associated Press; By STEPHEN BERNARD]

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