Wall Street stock futures pointed to a lower open for equities on Tuesday on renewed fears the euro zone's sovereign debt crisis is worsening, with shares seen tracking a slump in European stocks on Monday when the U.S. market was closed.
European stocks <.FTEU3> fell 4 percent in the previous session, with financial shares falling to their lowest in more than two years on a U.S. lawsuit connected to the packaging of toxic mortgage debt as well as on concerns about global growth and the euro zone sovereign debt problems.
The Financial Times said big U.S. banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that may limit their legal liabilities in return for a multibillion-dollar payment.
Futures for the S&P 500, the Dow Jones and the Nasdaq 100 were down 1.3 to 1.7 percent, after key U.S. share indexes fell 2.2 to 2.6 percent on Friday.
The market was closed for the Labor Day holiday on Monday.
In Europe, Swiss shares <.SSMI> rose 4 percent after the Swiss National Bank said it would set a minimum exchange rate target of 1.20 francs to the euro, but the pan-European FTSEurofirst 300 <.FTEU3> index of top shares was down 0.3 percent in choppy trade.
Investors awaited the U.S. Conference Board's employment trend index for August and the Institute for Supply Management's August non-manufacturing index for hints about the pace of economic recovery, after data on Friday shocked the market by showing a halt in U.S. employment growth.
Both the reports are due at 10 a.m. ET.
Best not to get too excited about the prospect of markets recovering just yet ... as we need to remember that the U.S. has its own basket of economic problems to resolve as well, particularly of how it will invent many new jobs required, said Howard Wheeldon, senior strategist at BGC Partners in London.
Investors stayed jittery as the euro zone debt crisis showed no signs of abating. Yields on Italian 10-year bonds climbed to nearly 5.6 percent a day earlier, approaching the levels of more than 6 percent seen before the European Central Bank began buying its bonds last month.
Italian yields have come under renewed pressure over the past week on growing frustration that the country is not doing enough to get its debt under control, prompting warnings from the current and incoming ECB chiefs that the central bank's bond purchases were temporary and no substitute for fiscal reforms.
Charts painted a negative outlook for U.S. shares. Credit Agricole said the Standard & Poor's 500 Index <.SPX> was holding below its daily base line and the weekly picture was also bearish as the index was still holding below the weekly conversion and base, as well as its 200-day moving average at 1,284 points. The index fell 2.5 percent on Friday.
Among industry news, Japan's Toshiba Corp <6502.T> is in talks with Shaw Group over the U.S. company's 20 percent stake in nuclear power plant company Westinghouse Electric Co, a person familiar with the matter said.
Industry blogs and the Wall Street Journal said over the weekend that Amazon.com Inc was testing a major redesign of its familiar online store as it moved to offer a $250 tablet device to rival Apple Inc's iPad.
Dell Inc is partnering China's top search engine Baidu Inc to develop tablet computers and mobile phones, targeting the Chinese market now dominated by Apple and Lenovo <0992.HK> devices.
(Editing by David Holmes)