Wall Street was set for a sharply lower open and its third straight down day on Thursday as a grim outlook from the Federal Reserve and downbeat data in Europe and China heightened fears about a global recession.

In the latest economic data, Americans filed fewer new claims for jobless benefits last week, but the decline was not enough to dispel worries the economy was dangerously close to falling back into a recession.

We haven't seen any strength in jobless claims. This was down from last week, but still higher than expected, said William Larkin, portfolio manager with Cabot Money Management in Salem, Massachusetts. However, this is all secondary to the Fed. Everyone is still talking about the dire language in that statement, and that dwarfs everything else that's happening.

The Fed announced a program Wednesday to sell $400 billion of short-term Treasury bonds and buy the same amount of longer-term U.S. government debt in a bid to lower long-term borrowing costs and bolster the housing market.

But investors were more focused on the Fed's warning of significant risks to the economy.

Adding to the worries, data showed China's manufacturing sector contracted for a third straight month in September. The world's second-biggest economy is vulnerable to fading demand from the United States and Europe, its biggest export markets.

Hidden behind the Greek drama over the past few weeks and unveiled again yesterday with the (Fed) statement and action, the unfolding global economic slowdown is back to front and center, said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.

S&P 500 futures fell 31.1 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 slid 273 points, and Nasdaq 100 futures dropped 51.50 points.

Banks were under the microscope a day after Moody's lowered debt ratings for Bank of America Corp , Citigroup Inc and Wells Fargo & Co . The rating agency said the U.S. government was getting less comfortable with bailing out large troubled lenders.

Bank of America shares were off 3.5 percent at $6.16 in premarket trade, while Citigroup also lost 4.2 percent to $24.45 and Wells Fargo fell 3.3 percent to $22.92.

Wall Street suffered its worst selloff in a month on Wednesday, but the indexes were still above August lows, suggesting room for declines.

FedEx Corp reported higher quarterly profit but pared its outlook for the full year early Thursday. The stock fell 2.6 percent to $70.65.

Investors will watch the two-day Group of 20 meeting in Washington for any further policy response in tackling the global slowdown and euro zone debt crisis.

(Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)