Indications: Futures point lower as European fears remain

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By Simon Kennedy, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures pointed to further declines Friday as fears over the economic health of several European countries continued to send jitters through global markets, with investors also awaiting key data on U.S. employment.

S&P 500 futures fell 4.4 points to 1,057.20 and futures on the Dow Jones Industrial Average fell 40 points, while those for the Nasdaq 100 were up a quarter point to 1,735.00.

U.S. stocks skidded sharply on Thursday as events overseas overshadowed the latest round of earnings figures. The Dow Jones Industrial Average lost 268 points, having briefly moved below 10,000 for the first time since early November.

European shares continued to fall Friday, posting losses for the third straight session as investors fretted about the health of Greece, Portugal and Spain, with Portugal's PSI 20 index falling 3.1%. See story on the fears over Southern Europe.

"It's not easy to get a link between high budget deficits in Greece, Spain and Portugal and the outlook for corporate U.S. But clearly, instability in Europe would not be great for the global economy," said Philip Shaw, strategist at Investec Securities.

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Worries about European sovereign debt also weighed on Asian markets, with Japan's Nikkei 225 Average losing 2.9% -- its biggest drop in more than two months.

The main economic focus in the U.S. is likely to be the government's official data on employment, and in particular a revision of the payrolls figures for the year through March 2009, which could show this has been the worst recession in terms of job losses since the end of World War II. See story on likely revision of payrolls figures.

For January, economists polled by MarketWatch are expecting payrolls to grow by a seasonally adjusted 25,000, which would be just the second increase since the recession began 25 months earlier.

The unemployment rate is expected to remain steady at 10%.

The dollar gained ground against both the euro and the yen, with the euro slipping 0.2% to $1.3693. Crude oil prices edged lower.

Airgas /quotes/comstock/13*!arg/quotes/nls/arg (ARG 43.53, -0.72, -1.63%) shot up 37% to $59.69 after Air Products /quotes/comstock/13*!apd/quotes/nls/apd (APD 73.69, -2.50, -3.28%) offered $5.1 billion, or $60 a share, for its rival.

Toyota Motor /quotes/comstock/13*!tm/quotes/nls/tm (TM 71.78, -1.71, -2.33%) rose 1.8% in pre-market trade, as the company's president offered "his heartfelt apology" over braking systems problems, his first press conference since the company was hit by a wave of recalls.

Kraft Foods /quotes/comstock/13*!kft/quotes/nls/kft (KFT 28.39, -0.09, -0.32%) fell 1%. The company said its offer for Cadbury /quotes/comstock/13*!cby/quotes/nls/cby (CBY 53.30, -0.52, -0.97%) is now unconditional after getting the approval from shareholders holding 75% of the U.K. chocolate maker's stock.

Simon Kennedy is the City correspondent for MarketWatch in London.