* 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
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Oct 6 (Reuters) - U.S. stocks headed for a slide
at the open on Monday as concerns about the widening fallout
from the credit crisis fueled a global equities sell-off and
fears about a global recession mounted.
A spate of bank rescues in Europe heightened fears about
the stability of global financial institutions.
Financial shares were poised to lead the slide on Wall
Street after markets tumbled in Asia overnight. In Europe major
indexes were off 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.
"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 25 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 206
points and Nasdaq 100 <NDc1> futures shed 24 points.
Expectations that the global sell-off might spark
coordinated interest rate cuts by global central banks helped
futures pare some of their losses. "The markets themselves are
going to force some sort of coordinated action," said
Cardillo.
A drop 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 4.4 percent to
$89.79 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 fell 6 percent to $17.60 before the bell,
while shares of Wells Fargo slipped 2.1 percent to $33.84.
Wachovia shares were off 3.9 percent at $5.97.
Wall Street ended its worst week in seven years with
another tumble on Friday on fears the financial rescue plan may
not unblock credit markets and stave off recession.
(Editing by Kenneth Barry)
