U.S. stock index futures fell on Monday as investors assessed whether a possible debt default by two of Dubai's flagship firms could threaten a global economic recovery.
Retail stocks are also in focus after data showed U.S. consumers spent much less per person as the holiday season started this weekend, dimming hopes of a retail comeback to help fuel the recovery next year.
Making matters worse, the Dubai government disclaimed responsibility on Monday for the debts of the Dubai World conglomerate, squashing creditor hopes that the emirate would guarantee its liabilities.
The focus is on any kind contagion coming out of Dubai, said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.
The interesting thing here is that Abu Dhabi made some comments, but it's still opaque as to what the next move might be.
S&P 500 futures shed 1.2 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 fell 20 points, while Nasdaq 100 futures were off 3 points.
On Sunday, the United Arab Emirates offered banks emergency support, the first steps in easing fears of a looming debt default by the two Dubai firms.
Dubai last week asked for a six-month repayment freeze on debt issued by state conglomerate Dubai World and its Nakheel construction unit.
In equities news, UBS downgraded the industrial sector to underweight from neutral, saying a continued weakness in demand was limiting improvement in capacity utilization rates and pricing.
Economic data scheduled for Monday includes the Chicago Purchasing Manager's index (PMI) for November, a key indicator of the economic health of the manufacturing sector, due at 9:45 EST.
U.S. Senator Bernie Sanders said Sunday he will not vote to reconfirm Ben Bernanke as chairman of the Federal Reserve in a preview of the rough treatment Bernanke may get this week on Capitol Hill.
The central bank chief will testify Thursday before the Senate Banking Committee at a hearing on his nomination to a second four-year term.
European shares fell about 1 percent in early trading, led lower by oil producers and financial stocks on concerns about Dubai. Asian stocks rose 3 percent, recovering from last week's sell-off as investors hoped the fallout of a potential Dubai default would be limited.
(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)