Stocks set for lower open on bank unease

By IBTimes Staff Reporter | January 20 2010 9:32 AM

U.S. stocks were poised for a lower open on Wednesday on reports of bank lending restrictions in China and as quarterly results from three big U.S. banks raised uneasiness about the state of the sector.

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Official media and banking sources said Chinese authorities instructed some major banks to curb lending over the rest of this month after an early burst of credit. The central bank has also told some individual lenders to increase their reserve requirement ratio by one-half of a percentage point.

Bank of America Corp shares fell 0.4 percent to $16.25 in premarket trade after posting a wider-than-expected quarterly loss.

Morgan Stanley slipped 1.1 percent to $30.81 after reporting quarterly results that fell short of estimates, but Wells Fargo & Co edged 0.5 percent higher to $28.42 after reporting a quarterly profit on a pick-up in fee income.

Recent results from financials JPMorgan Chase & Co and Citigroup Inc revealed sizable loan losses at the banks.

It's somewhat of a mixed picture in terms of the reports so far from banks, said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

A lot of complexity here too because of the various pieces moving around in the accounting rules, so it's not a quick analysis of the earnings reports.

Separately, JPMorgan has entered exclusive talks to buy the RBS Sempra commodities joint venture, sources said on Wednesday, in a deal expected to be worth about $4 billion.

Kraft Foods Inc slid 2.7 percent to $28.63 premarket after billionaire investor Warren Buffett told CNBC television he had a lot of doubts about the company's deal to buy Cadbury Plc . Buffett's Berkshire Hathaway Inc is a major shareholder in Kraft.

S&P 500 futures fell 8.1 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 lost 60 points, and Nasdaq 100 futures dropped 10.5 points.

Government data showed December U.S. producer prices rose for the third month in a row, increasing by 0.2 percent on a surge in food prices.

Housing starts in December fell unexpectedly, weighed down by a drop in construction activity for single-family dwellings, but new building permits rose 10.9 percent last month, according to Commerce Department data.

(Editing by Padraic Cassidy and Jeffrey Benkoe)