Global stocks looked set for big losses on Monday as the focus of Europe's sovereign-debt crisis shifts to core member states and the Chinese economy produces yet another worrisome sign.
U.S. index futures were down sharply with about two hours before markets open, suggesting that stocks will fall at the start of trading. Futures for the Dow Jones industrial average were down 121 points or 0.9 per cent. Futures for the broader S&P 500 were down 14 points or 1 per cent.
In Europe, the U.K.'s FTSE 100 fell 1.7 per cent and Germany's DAX index fell 2.7 per cent in afternoon trading. In Asia, Japan's Nikkei 225 fell 0.2 per cent in overnight trading.
The losses come as political changes in Europe threaten to push the long-simmering debt crisis into the open again, but this time with some of the more economically stable countries at the epicentre. In the Netherlands, which is one of the few countries to maintain its top-notch credit rating amid a rash of recent downgrades, talks to reduce the government's budget have collapsed, raising concerns that austerity measures are being pushed back.
There were similar concerns in France, where President Nicolas Sarkozy placed second in the first round of presidential elections and a far-right anti-euro candidate attracted a surprising amount of support.
Meanwhile, the news remains grim elsewhere in Europe. Spain and Italian government bond yields rose, sending borrowing costs higher as the two countries struggle to cut government spending amid weak economic activity.
China provided little optimism of its own. There, the preliminary HSBC purchasing managers' index improved slightly, but pointed to the sixth straight monthly contraction in manufacturing activity.
At least there was a big-dollar deal to provide investors with a distraction from the economic news: Nestle agreed to buy the infant nutrition business from Pfizer Inc. for nearly $12-billion (U.S.), considerably higher than a figure reported by the Wall Street Journal last week.
Commodity prices moved lower. Crude oil fell to $103.06 a barrel, down 0.8 per cent. Gold fell to $1633 an ounce, down 0.6 per cent.
David Berman