* Dimming prospects of US auto rescue unnerve markets
* Citigroup reverses rise after Saudi stake boost
* Jobless claims point to more labor market weakness
* Wall St to open at lowest level in 5-1/2 years
* For up-to-the-minute market news, please click on
STXNEWS/US
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Nov 20 (Reuters) - U.S. stocks were set to slide
at the open on Thursday as investors worried that failure by
U.S. automakers to get a government bailout would add to the
economy's woes, fears that were heightened by news of further
labor market deterioration.
A government report showed that the number of U.S. workers
filing new claims for jobless benefits rose to their highest
level in 16 years. For details, see []
Investors also fretted about the future of Citigroup Inc
<C.N> as the bank's stock keeps plunging from fallout from the
mortgage crisis.
A day after Citigroup shares slid to a 13-year low, Saudi
Prince Alwaleed bin Talal said he would boost his stake in
Citigroup to 5 percent. The news initially sent Citi shares up
as much as 6 percent, but heading into the open the gains had
evaporated.
"One of the major problems here is what's going to be the
effect on the economy if the automakers are not bailed out,"
said Peter Cardillo, chief market economist at Avalon Partners
in New York. "Unfortunately, even some of the good news that's
out there is not able to reverse negative market sentiment."
S&P 500 futures SPc1> fell 18.9 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> declined
156 points, and Nasdaq 100 NDc1> dropped 22 points.
The magnitude of the drop in stock index futures suggested
that the market's benchmark indexes would open 2 percent or
more lower, and the Dow industrial average <> could fall
below its bear-market intraday low set October 10, a technical
breach which the Nasdaq and the S&P 500 have already done.
As a sign of weakening global growth, oil extended its fall
on expectations of falling demand. U.S. crude futures were down
$3.63 at $49.99 a barrel for the first time below $50 since
Jan. 18, 2007.
With Congress winding down its session, the auto makers
appeared to have made very little progress in convincing
Washington to agree to a $25 billion rescue package that the
automakers say is necessary to avert bankruptcy.
Even after two days of pleas for aid by auto executives on
Capitol Hill, the fate of General Motors <GM.N> , Ford <F.N>
and Chrysler hangs on the balance.
The automotive executives on Wednesday predicted a
far-reaching calamity for the U.S. economy without a government
lifeline. Before the bell shares of General Motors, a Dow
component, slid more than 10 percent to $2.50.
Worry about the fate of the U.S. auto industry, a major
employer, was one of the catalysts for Wednesday's stock market
plunge to a 5-1/2 year low, along with fears of more losses for
the financial sector.
(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)
