* Bernanke says Fed may extend emergency lending
* Global equity markets tumble on financial jitters
* Drop in oil price underpins positive sentiment
* Report on pending home sales on tap
(Updates with Fannie and Freddie shares rising, updates
prices)
By Ellis Mnyandu
NEW YORK, July 8 (Reuters) - U.S. stocks headed for a flat
open on Tuesday after Federal Reserve Chairman Ben Bernanke
said the central bank may extend emergency lending for big Wall
Street investment banks, easing worries about the financial
services sector.
Fresh fears about the outlook for banks and brokerages
battered by the credit crunch had spurred losses in the market
on Monday.
Adding to Tuesday's positive tone were a drop in oil prices
below $139 a barrel and comments from a federal regulator that
a proposed accounting change should not dictate capital
requirements for home finance companies Freddie Mac <FRE.N> and
Fannie Mae <FNM.N>. For details, see [].
Shares of Fannie Mae climbed 6.4 percent to $16.75 before
the bell, while Freddie Mac rose 8 percent to $12.85.
Both stocks were among the market's top drags on Monday as
investors feared that the companies might have to raise fresh
capital to shore up their balance sheets, diluting their share
price.
"I think it's a combination of a couple of things:
Bernanke's comments on extending investment bank loans into
2009 and the sell-off in oil," said Anthony Conroy, head trader
for BNY ConvergEx, an affiliate of the Bank of New York.
S&P 500 futures <SPc1> slipped 1.60 points and were about
even with 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> declined 8
points and Nasdaq 100 <NDc1> futures slipped 0.5 point.
Before Bernanke's speech, futures were much lower, and the
market was set to open down.
U.S. front-month crude <CLc1> declined $2.74, or almost 2
percent, to $138.58 a barrel.
In remarks to a mortgage lending forum sponsored by the
Federal Deposit Insurance Corp., Bernanke said credit costs
have been driven higher and the pace of U.S. economic growth
also has been hurt by market turmoil. []
A bounce on Wall Street will help the S&P 500 avert
slipping into bear market territory. The index is less than 1
point away from entering a bear market, a decline of 20 percent
or more from the recent closing peak.
Stock markets in Europe were lower by 1 percent or more,
while in Asia Tokyo's and Hong Kong's main indexes slid about 3
percent and Seoul's index plunged to a 14-month low. The MSCI
main world equity index <.MIWD00000PUS> has sunk 20 percent
from its record high into a bear market.
Data on pending home sales for May is due at 10 a.m. (1400
GMT)
Aluminum producer Alcoa Inc <AA.N> is due to post its
quarterly results after the bell, marking the start of Wall
Street's quarterly earnings reporting season.
(Additional reporting by Walter Brandimarte, Editing by
Kenneth Barry)
