(Updates throughout)
* Stocks face more losses, Dow nears bear territory
* Oil hits record $142 a barrel
* Banks again set to weigh on sentiment
* Data on personal income and spending on tap
By Ellis Mnyandu
NEW YORK, June 27 (Reuters) - U.S. stock futures fell on
Friday as nervousness about record oil prices and the health of
banks held sway a day after a 358-point drop in the Dow left it
at a 21-month low and on the doorstep of a bear market.
Stock markets around the world slid on worry about the
outlook for corporate profits and quickening inflation. Tokyo
ended down 2 percent, Hong Kong slid 1.8 percent and in Europe,
most major indexes were in the red by 1 percent or more.
Similar concerns were on display in U.S. markets, as stocks
looked poised to record their largest monthly losses in nearly
five years with just two sessions remaining for June.
Oil prices shot past $142 a barrel, stoking worry about
inflation and its drag on consumer spending and business
investment.
In addition, analysts gave more gloomy predictions about
the outlook for banks, which have been reeling from the credit
crisis. Lehman Brothers predicted rival Merrill Lynch <MER.N>
would write down another $5.4 billion in the second quarter and
slashed its price target for the stock. For details, see
[].
Lehman shares were down 1.7 percent at $22.22 before the
bell. Merrill was down more than 1 percent in light trading
before the open.
S&P 500 futures <SPc1> were down 3.2 points, below fair
value, a mathematical formula that evaluates pricing by taking
into account interest rates, dividends and time to expiration
on the contract.
Dow Jones industrial average futures <DJc1> slipped 28
points, and Nasdaq 100 <NDc1> futures fell 7.25 points.
"With oil up again and gold higher, it appears to me we're
probably going to have rough open in the first hours of
trading," said Matt McCall, president of Penn Financial Group
in Denver Colorado.
Even so, McCall said Thursday's 3 percent across-the-board
drops in U.S. indexes could draw bargain hunters.
"Typically on days following a sell-off like yesterday's,
you're going to have a snap-back at some point," McCall said.
U.S. crude climbed to a record for a second straight day,
hitting as high as $142.26 a barrel and adding to concerns
about the toll of higher energy costs on consumers and the
outlook for corporate profits.
The diminishing appetite for riskier assets underpinned
government bonds due to their relative safety, pushing the
yield on two-year U.S. Treasuries <US2YT=RR> to a two-week
low.
The Dow ended on Thursday down 19 percent from its reccord
close in October. Analysts generally view a 20 percent decline
as signaling bear market territory.
Economic reports include May personal income and spending
due at 8:30 a.m. (1230 GMT) and the Reuters/University of
Michigan consumer sentiment index for June at 9:55 a.m. (1355
GMT).
Bank analyst Richard Bove of Ladenburg Thalmann widened his
full-year loss forecast for Lehman Brothers <LEH.N> and also
cut his price target on the investment bank. [].
Lehman shares slid 2.6 percent in Europe.
(Editing by Kenneth Barry)
