Futures flat, credit downgrade for Ireland

NEW YORK (Reuters) – Stock index futures were little changed on Friday as wary investors kept their eyes on the euro zone debt crisis after Ireland's credit rating was slashed.

European Union leaders agreed to create a permanent financial safety net starting in 2013, and the European Central Bank will nearly double its capital to cope with bigger credit risk.

European bank stocks were hit hard after Moody's slashed Ireland's credit rating by five notches.

U.S.-listed shares of Allied Irish Bank (AIB.N) fell 4.6 percent to $1.24 in premarket trade, while Barclays (BCS.N) also fell 2.1 percent to $16.25.

"We are headed for a sluggish open because of European woes ... but since this isn't something we weren't expecting, I don't see the market selling off much," said Peter Cardillo, chief market economist at Avalon Partners in New York.

S&P 500 futures were down 0.2 point and 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 fell 11 points, while Nasdaq 100 futures lost 0.75 point.

U.S. stocks, bucking a trend of late-day selloffs, ended higher Thursday as economic bellwether FedEx Corp (FDX.N) offered a bullish profit outlook that augured well for broad growth.

Market volume and volatility could increase later in the day as traders adjust or exercise derivative positions on four different types of expiring equity futures and options contracts, also know as "quadruple witching."

The U.S. House of Representatives approved a compromise deal between President Barack Obama and Republicans late Thursday to extend expiring tax cuts -- a high-stakes gamble to create jobs at a cost of deepening the U.S. debt. Congress was racing to enact the legislation as it faced an end-of-year deadline when the Bush-era tax cuts were set to expire.

The Conference Board releases its report on November leading economic indicators at 10:00 a.m. EST (1500 GMT). Economists in a Reuters survey forecast a 1.1 percent rise, compared with a 0.5 percent increase in the prior month.

Ford Motor Co (F.N) intends to raise its 30 percent stake in Jiangling Motors Corp (000550.SZ), a major Chinese light commercial vehicle maker, a source said.

Blackstone Group LP (BX.N) agreed to restructure about $7 billion of the remaining debt tied to its 2007 purchase of Equity Office Properties Trust, the largest leveraged buyout ever, the Wall Street Journal reported.

Oracle Corp (ORCL.O) forecast current-quarter profit will beat estimates as it reported that new software sales surged. Oracle rose 4.4 percent to $31.60 premarket.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

Futures flat ahead of housing data

NEW YORK (Reuters) – Stock index futures were little changed on Monday ahead of data on new home sales, following the best three-week period on the S&P 500 Index in almost a year.

S&P futures hovered around 1,100, a key level broken by the benchmark on Friday for the first time in a month. Some technical measures of both the S&P 500 (.SPX) and S&P futures are sending bullish signals, but charts also show further resistance roughly 1 percent above current levels. Recent economic data has also cut into the positive sentiment.

S&P 500 futures fell 1.7 2 points and were about even with 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 9 points and Nasdaq 100 futures shed 4.25 points.

BP Plc (BP.L)(BP.N) was up 2.6 percent in premarket trading as the British oil giant is expected to install an American troubleshooter as chief executive in the next 24 hours, replacing Tony Hayward, who has come under fire for his handling of the worst oil spill in U.S. history.

Pharmaceutical stocks will be in the spotlight The Wall Street Journal said Britain's GlaxoSmithKline Plc (GSK.L)(GSK.N) had recently made "a very casual approach," to Genzyme Corp (GENZ.O) but industry insiders and analysts said Glaxo's chief executive was unlikely to pursue a deal. U.S.-traded Glaxo shares dipped 1.4 percent to $35.99 premarket.

Sources familiar with the matter said on Friday that Sanofi-Aventis (SASY.PA)(SNY.N) was sounding out Genzyme, prompting a 15 percent jump in the U.S. biotech company's market value to $16.7 billion.

Investors will eye the U.S. Commerce Department's new home sales data for June, at 10 a.m. (1400 GMT). Economists in a Reuters survey forecast a total of 320,000 annualized units in June compared with 300,000 in May.

Legg Mason Inc (LM.N), Fluor Corp. (FLR.N), Lorillard Inc (LO.N), Masco Co (MAS.N), Plum Creek Timber Co Inc (PCL.N) and Range Resources Corp (RRC.N) are due to report results on Monday.

U.S. stocks rose on Friday as GE's (GE.N) dividend hike boosted investor sentiment, the Dow Jones industrial average gained 102.32 points, or 0.99 percent, to 10,424.62, and The Nasdaq Composite Index (.IXIC) added 23.58 points, or 1.05 percent, to 2,269.47.

The S&P 500 rose 8.99 points, or 0.82 percent, to 1,102.66, closing above the key 1,100 level for the first time in a month after coming close but failing four times in July.

EU companies: debt crisis is hurting recoverya

BRUSSELS: European companies warned Monday that the region's debt crisis risks damaging a fragile economic recovery by hiking costs for businesses to borrow and invest.

The euro has shed some 20 percent of its value over the past six months as financial markets lost confidence in European governments' ability to rein in massive debt levels while growth remains low.

Philippe de Buck, who heads the BusinessEurope group representing some 20 million companies, told reporters that "business is more than concerned about the credibility of the euro" after its sharp drop in value.

The group says that businesses are seeing the real impact of recent months' volatile markets in higher costs for borrowing and more difficulty in getting credit. It says this holds companies back from investing more in the economy.

It is calling on European Union leaders to bolster confidence in the euro currency and their own finances by making the public spending cuts they need to balance their books — and also make longer-term reforms to boost growth by opening up the labor market and shedding business barriers across the 27-nation bloc.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

Manufacturing is among the few sector picking up in Europe, fueled by exports that BusinessEurope says will grow 5 percent in 2010 and 2011 — and helped by the lower value of the euro which makes eurozone products cheaper for U.S. customers and Asian buyers using the dollar.

Eurozone industrial output grew 0.8 percent in April from the previous month, according to the EU statistics agency, and increased 0.5 percent in the entire EU.

But BusinessEurope says economic growth is stabilizing "at a too low level" — and companies are still very cautious about the recovery. The region's jobless rate will likely stay at record highs until employers start hiring again in late 2011, it forecasts.

The Spanish government was trying Monday to win back market confidence by pushing on with efforts to curb public spending, this time by selling crucial labor reforms to skeptical opposition parties that would loosen up rigid hiring and firing rules.

The ruling Socialist Party says this could encourage companies to hire more workers — reducing a jobless rate that is the highest in the eurozone — and help to kick start economic growth.

The measures also aim to appease markets and EU nations worried that Spain could be the next eurozone country to require a bailout. Spain must refinance €40 billion ($49 billion) in debt in June and July, according to Deutsche Bank.

Greece has already sought a bailout from other European Union nations and the International Monetary Fund and some economists believe other indebted nations — such as Spain and Portugal — may also need financial rescue if they can't borrow what they need from wary investors.

EU and German officials on Monday denied German media reports that Spain was likely to seek help soon.

European Commission Amadeu Altafaj Tardio told reporters in Brussels that there was "no such request and no plan whatsoever to provide financial assistance." German finance ministry spokesman Michael Offer also said "we see no need for action at this point."

Separately, French Prime Minister Francois Fillon expressed concern that Europe's drive toward austerity could go too far and trigger a new economic downturn.

"It is difficult for the European states to balance debt reduction ... while simultaneously tightening and not triggering a new recession," he told reporters in Oslo.

BusinessEurope's de Buck said government spending cuts had to be accompanied by moves to stoke growth.

"Discipline and growth can go hand in hand even it can be difficult," he said, calling for governments to shun "indulgence" and become more efficient with their spending.

Merkel, Sarkozy discussing the economy

BERLIN: The German chancellor and the French president met Monday to prepare for a European Union summit later this week, amid speculation of a rift in German-French views on economic policy.

Angela Merkel welcomed Nicolas Sarkozy to discuss a joint strategy on how to curb the debt crisis that has dragged down the common European currency and rattled economies across the continent.

The leaders of the eurozone's most important economies were to have held talks last week, but the meeting was canceled with only a few hours notice, fueling rumors the two are split on how Europe should best handle the financial crisis.

Germany is calling for sanctions on countries with high deficits and advocates the path of austerity as a model for Europe after presenting its own package of budget cuts on June 7, worth €80 billion ($97 billion) by 2014.

But the French government minister in charge of stimulus efforts, Patrick Devedjian, last week explicitly warned that German-style austerity measures "would be dangerous because it risks killing growth" in France.

The next test for the 16 countries sharing the euro currency — who passed a €110 billion rescue package for Greece and then set up a wider bailout found for countries in financial trouble worth €750 billion — could be ahead as pressure mounts on Spain to curb its deficit.

EU leaders meet for talks on June 17 on a new 10-year growth strategy for the region to build on a weak recovery.

While Sarkozy supporter creating an independent economic government for the eurozone, Merkel insists such decisions should be made by all EU leaders, such as the European Council.

Despite recent tension over the bailout packages for Greece and the eurozone, Sarkozy and Merkel last week showed that France and Germany were still working together closely, and wrote a joint letter urging the European Commission to speed up efforts to regulate financial markets.

The combined economic output of Germany and France, with their respective GDP in 2009 standing at €2,400 billion and €1,950 billion according to EU statistics, represents almost half of the eurozone's GDP of some €9,000 billion.