US STOCKS-Futures drop on bank earnings jitters

                                

                                
 * China banks instructed to curb lending
                                
 * Bank of America posts Q4 loss
                                
 * IBM's profit beats estimates after the bell
                                
 * Futures off: Dow 33 pts, S&P500 6.8 pts, Nasdaq 7.25 pts
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
                                
 By Chuck Mikolajczak
                                
 NEW YORK, Jan 20 (Reuters) - U.S. stock index futures fell
on Wednesday on reports of bank lending restrictions in China
and as quarterly results from a host of U.S. banks increased
uneasiness about the state of financial companies.
                                
 Official media and banking sources said Chinese authorities
instructed some major banks to curb their lending over the rest
of this month after an early burst of credit. The central bank
has also told some individual lenders to increase their reserve
requirement ratio by half a percentage point. For details, see
[ID:nLDE60J0FP]
                                
 Bank of America Corp <BAC.N>shares rose 0.2 percent to
$16.35 in premarket trade after posting its fourth quarter
results. [ID:nN19230402]
                                
 Morgan Stanley <MS.N> and Wells Fargo <WFC.N> also report
results on Wednesday.
                                
 Recent results from financials JPMorgan Chase & Co <JPM.N>
and Citigroup Inc <C.N> revealed sizable loan losses at the
banks. [ID:nN15183524][ID:nN19205676]
                                
 "The finance sector has done better than anybody else so
they are starting to show signs of plateauing," said Barry
Ritholtz, director of equity research at Fusion IQ in New
York.
                                
 "The problem with doing any sort of bank analysis is every
since the mark-to-market rules were changed by the (Financial
Accounting Standards Board), we don't really know what their
balance sheets are."
                                
 JPMorgan has also entered exclusive talks to buy the RBS
Sempra commodities joint venture, people familiar with the
matter said on Wednesday, in a deal expected to be worth about
$4 billion. [ID:nLDE60J0SG]
                                
 S&P 500 futures <SPc1> fell 6.8 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 <DJc1> lost 33
points, and Nasdaq 100 futures <NDc1> dropped 7.25 points.
                                
 Data on tap for Wednesday includes December U.S. producer
prices, which are expected to be flat from November, according
to a Reuters poll of economists. Also expected at 8:30 a.m
[1330 GMT] are December housing starts, forecast to tick up to
580,000 from the previous month, and December building permits,
expected to edge higher to 590,000.
                                
 Tech shares will garner attention after IBM Corp <IBM.N>
raised its 2010 profit outlook and posted a
higher-than-expected rise in fourth-quarter earnings, boosted
by cost cuts and a shift to more profitable contracts.
[ID:nN19218960]
                                
 IBM shares shed 1.5 percent to $132.10 in premarket trade.
                                
 European shares fell on Wednesday, led by miners on
mounting concerns about China reining in loose monetary policy,
though drugmakers gained on doubts over U.S. healthcare reform.
[ID:nLDE60J0H3]
  (Editing by Padraic Cassidy)