Stock futures point to lower open on Dubai worries

[November 30, 2009]  NEW YORK (AP) -- Stock futures are pointing to a modest decline Monday as investors try to balance concern about fallout from Dubai's debt crisis against encouraging signs from U.S. consumers.

Overseas markets were mixed with Asian stocks rallying sharply.

After initial sharp declines late last week, global markets are stabilizing following an announcement that Dubai World, the main investment arm of the Persian Gulf city-state, asked to defer $60 billion in debt repayments for six months.

There was worry that a debt default could touch off a new round of credit market worries, which plagued stocks last year as Lehman Brothers collapsed and banks stopped lending to each other.

However, it appears there is limited exposure to the debt in the U.S., which has eased some concerns. The United Arab Emirates, where Dubai is located, also said Sunday it will make extra funding available to all banks in the country, including foreign banks with local offices.

Analysts say European banks have more exposure than their U.S. counterparts. European markets were mostly lower Monday.

While investors were cautious about the credit market's fragile recovery, there were some encouraging signs from U.S. consumers. Their spending accounts for more than two-thirds of all economic activity, so a robust holiday shopping season would put investors at ease that the economy is recovering.

Investors have been worried rising unemployment would make shoppers uncomfortable with spending during the holidays. A key report on the nation's unemployment rate is due out Friday.

Preliminary figures by ShopperTrak, a research firm that tracks more than 50,000 outlets, showed sales rose 0.5 percent on Friday, the kickoff to the holiday shopping season. Online sales jumped 11 percent Thursday and Friday, according to comScore, an Internet research firm.

Retailers will provide further insight into the strength of the consumer on Thursday when they report key monthly sales figures for November.

Ahead of the opening bell, Dow Jones industrial average futures declined 11, or 0.1 percent, to 10,281. Standard & Poor's 500 index futures fell 1.00, or 0.1 percent, to 1,088.50, while Nasdaq 100 index futures declined 2.50, or 0.1 percent, to 1,756.75.

Stocks tumbled in holiday-shortened trading Friday as concern grew about Dubai's debt problems. The Dow dropped 155 points before closing three hours early for the Thanksgiving holiday. It had dropped as much as 233 points early in trading.

The move away from riskier stocks sent the price of safe-haven investments like Treasury bonds higher. The dollar also strengthened, pushing commodity prices lower.

Bond prices fell Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.23 percent from 3.21 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from 0.01 percent.

The dollar mostly fell against other major currencies, while gold prices also dipped.

Overseas, Japan's Nikkei stock average rose 2.9 percent. Britain's FTSE 100 declined 0.8 percent, Germany's DAX fell 1 percent and the CAC-40 in France dropped 1.4 percent.

[Associated Press; By STEPHEN BERNARD]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.