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May 30, 2012, 06.56 PM IST
MARKETS-USA-STOCKS:Wall St to open lower as euro zone worry intensifies
By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stock index futures pointed to a lower open on Wednesday, as rising bond yields for Italy and Spain and the latest poll results in Greece worsened fears about a spiraling of the euro zone's debt crisis.
Yields on 10-year Spanish bonds moved closer to the 7 percent level, a point at which other nations in the bloc were forced to seek a bailout.
Spain is expected to issue new bonds shortly in an effort to fund its troubled banks despite the increased borrowing costs.
Adding to the concern, Italian 10-year yields topped 6 percent for the first time since January at a bond sale, raising concerns the region is vulnerable to a contagion.
The latest poll from Greece showed the radical leftist SYRIZA party has taken the lead over the pro-bailout conservatives ahead of a national parliamentary election next month that may determine whether the debt-laden country stays in the euro zone.
"It seems inevitable the euro has got to break up, it's just how long can they drag it out and what are the ramifications," said Nathan Snyder, portfolio manager at Snow Capital Management in Sewickley, Pennsylvania.
The region's fiscal woes sent the euro to its lowest level in 23 months against the dollar. U.S. equities have been closely tethered to the currency's fortunes, with a 50-day correlation between the euro and the S&P 500 index at 0.91.
"The longer they drag it out, the less severe are the ramifications of a break-up and then who actually ends up exiting - so much of this is unwritten it is hard to put any sort of odds on how this plays out," Snyder said.
Futures briefly cut losses and the euro bounced after the European Commission said the the euro zone should move toward a banking union, consider eurobonds and the direct recapitalization of banks from its permanent bailout fund as well as boost growth and cut debt.
European shares were buffeted by the conflicting headlines, with the latest Greek poll pushing the FTSEurofirst 300 index down more than 1 percent.
S&P 500 futures fell 10.9 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 dropped 107 points, and Nasdaq 100 futures lost 22 points.
Economic data expected includes pending home sales for April. Economists in a Reuters survey expect a 0.1 percent rise compared with a 4.1 percent rise in the previous month.
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