* Global markets fall on credit, economic worry
* European bank rescues add to nervousness
* Citigroup, Wells Fargo battle for Wachovia
* Oil falls to 8-month low of $89 on weak demand worry
* Lehman Brothers CEO Fuld to testify on Capitol Hill
By Ellis Mnyandu
NEW YORK, Oct 6 (Reuters) - U.S. stock index futures slid
on Monday as concerns about the widening fallout from the
credit crisis fueled a global equities sell-off, and bank
rescues in Europe heightened fears about the stability of major
financial institutions.
Stock markets fell in Asia overnight and were tumbling in
Europe where major indexes were down about 5 percent despite a
push by Germany, Austria and other governments to reassure
depositors about their funds.
And with signs that the credit markets remain strained,
investors scurried toward the relative safety of government
debt, sending yields on two-year U.S. Treasuries below 1.5
percent.
"We are headed for a sharply lower open. The fear of
contagion is spreading on a daily basis, and that's why we are
lower," said Peter Cardillo, chief market economist at Avalon
Partners in New York.
"We are not seeing any real shift in interbank cost of
borrowing, which basically means that credit markets are still
locked up."
S&P 500 futures <SPc1> dropped 30 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> slid 264
points and Nasdaq 100 <NDc1> futures shed 33 points.
A slide in oil prices below $90 a barrel underscored fears
about the toll of the credit crisis on the outlook for global
economic growth, said Cardillo.
He added that investors doubted that there would be
immediate benefits from the $700 billion U.S. financial sector
rescue plan passed by Congress on Friday as questions about how
it will be implemented remained.
U.S. crude for November delivery <CLc1> fell 4 percent to
$89.67 a barrel.
In a bid to stave off further turmoil, France's BNP Paribas
<BNPP.PA> agreed to buy assets of troubled banking and
insurance company Fortis <FOR.BR><FOR.AS> in Belgium and
Luxembourg for 14.5 billion euros ($19.71 billion). For
details, see []
Over a frantic weekend, German officials clinched a revised
rescue deal for lender Hypo Real Estate <HRXG.DE> that will see
commercial banks and insurers provide 15 billion euros in
liquidity, on top of an initial pledge of 35 billion euros.
[]
In the United States, the Federal Reserve was pushing
Citigroup Inc <C.N> and Wells Fargo & Co <WFC.N> to compromise
over their competing bids for hobbled U.S. bank Wachovia Corp
<WB.N> that could result in them carving up its assets, people
familiar with the matter said.
Citigroup shares were down 4 percent at $17.60 before the
bell.
Wall Street ended its worst week in seven years with
another tumble on Friday on fears that the $700 billion
financial rescue package may not unblock credit markets and
stave off a U.S. recession.
(Editing by Kenneth Barry)
