(Adds H&R Block, Merrill, updates prices)
* Oil surges to new record, weighing on market
* On tap data on Midwest business activity
By Walker Simon
NEW YORK, June 30 (Reuters) - U.S. stock futures on Monday
pointed to a flat market open as oil climbed to a new high and
more gloomy forecasts for the financial sector threatened to
push the Dow average into a bear market.
The blue-chip average is on track to end the first half of
the year on Monday with its worst performance for a first half
since 1962 as the market faces pressure from spiraling oil
prices, weak profit outlooks and a credit crunch that has
triggered heavy losses at banks.
In the latest sign of doubts about the financial sector,
analyst Dick Bove forecast a big annual loss at Merrill Lynch &
Co <MER.N>, the world's largest brokerage. Merrill shares fell
1.3 percent to $32.26 before the opening bell.
A positive note was a jump of more than 8 percent in
shares of H&R Block <HRB.N>, the biggest U.S. tax preparer,
before the open. Block posted quarterly earnings above
forecasts, aided by a weak dollar, which helped boost revenue
from overseas.
On global markets, oil rose more than $3 a barrel, hitting
a high of $143.54, propelled by a threat from Iran's
Revolutionary Guards to impose controls on a vital waterway for
much of the Mideast crude's exports.
The rise in oil of more than 40 percent so far this year
has meant steady pressure on U.S. companies' profit margins.
"Higher oil suggests the trend we had last week in which we
have higher energy costs and weaker everything else," said
Rick Meckler, president of investment firm LibertyView Capital
Management, Jersey City, New Jersey.
"It just means lower profit margins for companies which use
oil and, more importantly, a weak consumer who spends more on
filling up the tanks and less on other consumer items."
S&P 500 futures <SPc1> were 1.5 points higher, above 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 19
points, and Nasdaq 100 <NDc1> futures fell 5.75 points.
Bove, an analyst at Ladenburg Thalmann, said he expected a
2008 loss by Merrill of $1.64 a share, compared with a prior
view of profit.
The S&P 500 and Nasdaq indexes were on track to post their
steepest first-half declines falls since 2002.
In the retail sector, UBS raised the price target of
Wal-Mart <WMT.N>, the world's No. 1 retailer, and of BJ's
Wholesale Club Inc <BJ.N>, the No. 3 warehouse club operator.
But UBS cut rival Target Corp's <TGT.N> price target.
The downturn in New York City business continued in June
after a brief pause in May, but reduced concerns about the
credit crunch may have contributed to a more upbeat outlook,
according to data from the National Association of Purchasing
Management-New York.
U.S. economic data on tap includes business activity
indicators for the U.S. Midwest. The Chicago purchasing
managers' report is due at 9:45 a.m. (1345 GMT).
(Editing by Kenneth Barry)
