U.S. stock index futures signal sharply lower open

* Futures for the Dow Jones industrial average (DJc1: ), the
S&P 500 (SPc1: ) and the Nasdaq 100 (NDc1: ) were down 2.2 to 2.5
percent at 0915 GMT on Tuesday, pointing to a steep decline on
Wall Street.

* World stocks tumbled on Tuesday, with Japan’s Nikkei
losing 3.1 percent and European shares down 2.8 percent in
morning trade, hit by renewed worries over the euro zone banking
sector after the Bank of Spain’s rescue of a savings bank over
the weekend, and by a report that North Korean leader Kim
Jong-il has ordered his military to be on a combat footing.

* The euro fell (Read more about the trembling euro. ) as concern about the euro zone’s banking
system fanned strains in money markets, boosting demand for
dollars across the board. Crude oil (CLc1: ) extended a drop
towards $68 a barrel and copper (MCU3: ) fell about 2 percent.

* U.S. two-year swap spreads pushed out to their widest
levels in 13 months on Tuesday, with traders expecting benchmark
dollar LIBOR to keep ratcheting higher as the euro zone debt
crisis makes banks wary of lending to European institutions.
Analysts said the combined sell-off in equity and credit
markets, along with the relentless rise in dollar funding costs,
was threatening to hobble the financial system a little more
than a year after pulling out of the subprime mortgage crisis.

* U.S. Treasury Secretary Timothy Geithner told future
Chinese leaders that the Obama Administration will cut its
budget deficit once it is sure the economy is safely growing.

* Geithner heads for London after the conclusion of a
two-day Strategic and Economic Dialogue with China. He meets new
British finance minister George Osborne before travelling to
Frankfurt for meetings with European Central Bank President
Jean-Claude Trichet and to Berlin for a Thursday meeting with
German Finance Minister Wolfgang Schaeuble.

* Potential Chinese moves to lower trade barriers could be
as important as exchange rate reforms in easing economic strains
with the United States, Washington’s top trade negotiator said
on Tuesday. [ID:nTOE64O02B]

* ICSC/Goldman Sachs release at 1145 GMT chain store sales
for the week ended May 22, versus the prior week. In the
previous week, sales fell 2.5 percent.

* At 1300 GMT, Standard & Poor’s releases its S&P
Case/Shiller Home Price Index for March. Economists in a Reuters
survey expect a fall of 0.3 percent versus a 0.1 percent fall in
the previous month.

* AT 1255 GMT, Redbook releases its Retail Sales Index of
department and chain store sales for May versus April. In the
prior period, sales rose 0.7 percent.

* At 1400 GMT, the Conference Board releases May consumer
confidence. Economists in a Reuters survey expect a reading of
59.0 compared with 57.9 in April.

* The Federal Housing Finance Agency issues at 1400 GMT Home
Price Index for March, while Federal Reserve Bank of Richmond
releases May indexes on area manufacturing and service sectors.

* AutoZone (AZO: ), the largest U.S. auto-parts retail chain,
and medical device maker Medtronic (MDT: ) are scheduled to
announce results.

* Walt Disney Co (DIS.N: ) has ended discussions to sell its
struggling Miramax Films division back to Hollywood producers
Harvey and Bob Weinstein, the Wall Street Journal said, citing
people familiar with the matter. [ID:nSGE64O06X]

* Private equity firm Blackstone Group LP (BX.N: ) has joined
a group bidding $1.5 billion for Australian hospital operator
Healthscope (HSP.AX: ), a source familiar with the situation said.

* AAR Corp (AIR.N: ) shares fell more than 9 percent in
extended trading on Monday after the aviation and defence
supplier provided its outlook for fourth quarter results.

* Japan’s Nikkei average (.N225: ) dropped 3 percent to its
lowest close in six months on Tuesday, as the euro fell (Read more about the trembling euro. ) further
on worries that Europe’s woes now included the health of some
banks in addition to sovereign debt problems.

* U.S. stocks (Read more about the stock market today. ) slid on Monday, driving the Dow to its lowest
level since Feb. 10. The Dow Jones industrial average (.DJI: )
dropped 126.82 points, or 1.24 percent, to 10,066.57. The
Standard & Poor’s 500 Index (.SPX: ) slipped 14.04 points, or 1.29
percent, to 1,073.65. The Nasdaq Composite Index (.IXIC: ) fell
15.49 points, or 0.69 percent, to 2,213.55.

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(Reporting by Atul Prakash; Editing by Jon Loades-Carter)

U.S. stock index futures signal sharply lower open