Stock futures drop on renewed European banking concerns 09/07 04:54 AM
By Chuck Mikolajczak
NEW YORK (Reuters) - Stock index futures fell on Tuesday after reports on
the European banking system rekindled concerns about the financial health of
the region.
The Wall Street Journal reported the European bank stress tests to measure
the strength of major banks understated some lenders' holdings in
potentially risky government debt.
Separately, Germany's banking association said the country's 10 biggest
banks may need 105 billion euros ($141 billion) in additional capital as it
revamps regulations designed to prevent future crises.
Barclays Plc (BCS:$20.2800,$0.9700,5.02%) U.S.-traded shares dropped 5.4 pct
to $19.18 premarket, and Deutsche Bank AG's (DB:$64.6100,$1.0500,1.65%) ADRs
were down 2.7 percent to $62.85 in premarket trading.
U.S. banks were lower, with Bank of America Corp
(BAC:$13.5000,$0.2200,1.66%) shedding 1.4 percent to $13.31, and JP Morgan
Chase & Co losing 1.2 percent to $38.70.
"The apparently never-ending European debt crisis is coming back to visit
the markets and with it, will bring a bout of doubt," said Andre Bakhos,
director of market analytics at Lek Securities in New York.
"We were up three solid sessions to start the month of September. We are
looking now at a situation that may take some recent enthusiasm away."
Wall Street posted its best week in the last two months, bolstered by
stronger-than-expected economic data that had reduced fears of a double-dip
recession.
S&P 500 futures lost 5.5 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 shed 41
points, and Nasdaq 100 futures fell 8 points.
Oracle Corp (ORCL:$22.92,00$0.44,001.96%) , the world's third-largest
software maker, said Monday it hired Mark Hurd, the former chief executive
of Hewlett-Packard Co (HPQ:$40.3400,$0.6600,1.66%) , as president. Hurd
resigned in August after a probe into sexual harassment allegations. Oracle
(ORCL:$22.92,00$0.44,001.96%) shares climbed 5.6 percent to $24.21 in
premarket trade.
The U.S. Justice department is looking into Google Inc's
(GOOG:$470.30,00$7.12,001.54%) takeover of airline ticketing software firm
ITA Software Inc on concerns the deal would exert too much influence on the
online travel industry, the Wall Street Journal reported.
Air Products and Chemicals Inc (APD:$78.0400,$0.8500,1.10%) raised its bid
for Airgas Inc (ARG:$66.6700,$0.5200,0.79%) to $5.5 billion, the latest
salvo in a hostile bid for its rival.
European shares fell 0.7 percent Tuesday to move below a key index
retracement level, with banks lower after a Journal report on European bank
stress tests.
Asian stocks dropped on caution over the global economy, with the Nikkei
average down 0.8 percent.
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