Stock index futures fell on Monday as renewed jitters about Europe's debt crisis and the global economy overshadowed the start of earnings season.

Equity markets fell, the euro slid more than 1 percent and the cost of insuring Italian debt jumped to a record amid fears Europe's debt crises could spread and news reports some European Union leaders were considering allowing a selective default by Greece.

U.S. lawmakers failed to reach an agreement over a budget deal at a meeting on Sunday. The continued impasse comes after a much-worse-than-expected U.S. employment reading for June hit equity markets on Friday.

In the short term, in terms of worries -- not actual events but worries --it's a little bit of a perfect storm for investors, said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.

Banks and other economically sensitive stocks came under pressure in early New York trading. Bank of America fell 1.1 percent to $10.58, while Freeport McMoran Copper & Gold fell 1.3 percent to $54.39.

S&P 500 futures slipped 13.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dipped 92 points, and Nasdaq 100 futures fell 27 points.

At the start of U.S. earnings season profits of S&P 500 companies are expected to increase an average of 7.3 percent in the second quarter from a year ago, down from first-quarter growth of 18.9 percent, Thomson Reuters data showed

Also worrying investors, Chinese annual inflation rose to a three-year high in June, data released on Saturday showed, increasing chances for yet more monetary policy tightening there.

European Council President Herman Van Rompuy called an emergency meeting of top officials to discuss the debt crisis, amid fears it could engulf Italy, the region's third-biggest economy.

The cost of insuring Italian debt against default jumped to a record high, with five-year credit default swaps rising 30 basis points to 279 basis points, according to data monitor Markit. The cost of insuring Greek, Portuguese and Irish debt against default also rose.

Shares in Italy's biggest bank, Unicredit Spa , were volatile on Monday after losing 7.9 percent on Friday, partly because of worries about the results of stress tests of European banks that will be released on July 15. Other banks stocks also fell heavily.

The FTSEurofirst 300 <.FTEU3> index of leading European shares fell 0.5 percent on Monday, extending a 0.8 percent fall in the previous session. Japan's Nikkei <.N225> fell 0.7 percent overnight after three weeks of gains.

Alcoa Inc is set to kick off the second-quarter earnings season, with analysts expecting a profit of 34 cents a share compared with 13 cents last year and revenues up 20 percent to $6.3 billion. Shares in Alcoa fell 0.8 percent to $16.25.

News Corp's $14 billion bid to buy out UK broadcaster BSkyB faces opposition from the British government, whose lawyers are drawing up plans to block the deal, the Independent newspaper said.

(Editing by Kenneth Barry)

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