Stock Futures Fall on China Growth Target Reduction


NEW YORK (TheStreet) -- U.S. stocks futures were pointing to a lower open Monday on worries about a contraction in global economic growth.

Futures for the Dow Jones Industrial Average were paring losses, falling 23 points, or 18.6 points below fair value, at 12,945. Futures for the S&P 500 were down 3.3 points, or 3 points below fair value, at 1366, and futures for the Nasdaq were behind by 5.3 points, or 3.3 points below fair value, at 2638.

U.S. stocks finished lower Friday after European markets posted losses, with analysts saying that a steep run-up warrants a "breather" for equities.

Risk sentiment was taking a hit after China reduced its growth target and amid indications that the eurozone's private sector shrunk in February.

Chinese Premier Wen Jiabao slashed China's 2012 economic growth target to an eight-year low of 7.5%, citing high inflation and a tepid worldwide economic outlook.

Meanwhile, the private-sector HSBC China services index showed that the country's services sector progressed at its fastest pace in four months last month, but was markedly below its long-term trend. The private-sector HSBC China Services Purchasing Managers' Index rose to a seasonally adjusted 53.9 in February from 52.5 in January.

As for the eurozone, Markit Economics said that its composite purchasing managers' index for the continent fell to 49.3 from the earlier estimate of 49.7 and from the previous month's reading of 50.4. The below-50 reading indicates business activity contracted last month.

London's FTSE was falling 0.2%, and Germany's DAX was declining 0.5 %. In Asia, Japan's Nikkei Average closed down 0.8%, while Hong Kong's Hang Seng index settled lower by 1.4%.

At 10 a.m. Factory orders for January will be published Monday by the Census Bureau and should show a slide of 1.6% after a jump of 1.1% in December. The Institute for Supply Management's non-manufacturing index, coming in at the same time, should show a reading of 56 for February after rising to 56.8 in January.


In corporate news, BP ( BP) reached a $7.8 billion settlement with the plaintiffs in the Gulf of Mexico oil spill case. The company said the cost of the settlement will be paid from a $20 billion trust the company set up to cover claims related to the April 2010 Deepwater Horizon drilling rig blowout and resulting oil spill. Shares of BP were rising 1.2% to $48.09.

American International Group ( AIG) is selling shares of its Asian unit, AIA Group, to raise about $6 billion to help it pay the U.S. government back for its bailout during the 2008 financial crisis. AIG is looking to sell a "significant proportion" of its 33% stake in AIA Group, according to AIA, which is listed in Hong Kong. The U.S. government owns 77% of AIG following the bailout of the giant insurer in 2008.

General Motors ( GM) will halt production of the Chevrolet Volt for five weeks because inventories are too high. The automaker told 1,300 employees at the Detroit-Hamtramck assembly plant of the planned March 19 through April 23 shutdown. Volt sales fell to 603 in January, down from 1,529 in December, the highest monthly total ever. In February, sales recovered to 1,023. In 2011, GM sold 7,671 Volts.

April oil futures were down 8 cents to $106.62 a barrel, while April gold futures were falling $4.40 to $1,705.40 an ounce.

The benchmark 10-year Treasury was down 4/32, raising the yield to 1.991%, while the U.S. dollar index was down 0.2% at $79.29.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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