Stock futures point to drop as world stocks sink

 @ibtimes on August 17 2009 5:16 AM

Stock index futures pointed to a sharply lower open on Wall Street on Monday, mirroring a selloff in Asian and European stocks on mounting worries equities' recent surge had run ahead of the global economic recovery.

At 4:59 a.m. EDT, futures for the S&P 500 were down 2.1 percent, Dow Jones futures were down 1.9 percent and Nasdaq 100 futures were down 2 percent.

On the macro front, data on Monday showed Japan's economy returned to growth in the second quarter, ending its longest recession since World War Two, but analysts warned of a rocky road ahead as the nascent recovery was based on short-term stimulus efforts around the world.

Japan's Nikkei average <.N225> fell 3.1 percent in its biggest one-day fall in nearly five months, as investors locked in profits after the gross domestic product data failed to produce a positive surprise.

Chinese stocks <.SSEC> tumbled 5.8 percent to their lowest close in two months on Monday, posting their biggest daily percentage drop in nine months on worries about added share supplies and commodity price declines.

European shares <.FTEU3> were down 1.8 percent in morning trade, retreating for a second day in a row, with banks and commodity-related stocks such as Barclays and Rio Tinto the main fallers as investors turned cautious about hopes for a speedy global recovery.

Oil fell to a two-week low, below $66 a barrel, after weak consumer sentiment in the United States raised concern that oil's recent rally, as with equities, had run ahead of the global economic recovery.

China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, is set to pour up to $2 billion soon into the U.S. mortgage system by hiring mandates under the U.S. Treasury-backed Public-Private Investment Plan (PPIP), sources told Reuters.

New York Attorney General Andrew Cuomo, probing illegal marketing and sales of auction rate securities (ARS), is likely to file a lawsuit on Monday against Charles Schwab Corp for civil fraud, the Wall Street Journal said, citing people familiar with the matter.

U.S. shares dropped broadly on Friday, with the major indexes snapping a four-week streak of gains after poor consumer sentiment data reignited worries about the strength of an economic recovery.

The Dow Jones industrial average <.DJI> dipped 76.79 points, or 0.82 percent, to 9,321.40. The Standard & Poor's 500 Index <.SPX> lost 8.64 points, or 0.85 percent, to 1,004.09. The technology-laced Nasdaq Composite Index <.IXIC> dropped 23.83 points, or 1.19 percent, to 1,985.52. For the week, the Dow shed 0.5 percent, the S&P fell 0.6 percent and the Nasdaq slid 0.7 percent.

(Reporting by Blaise Robinson; editing by Simon Jessop)

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