Indications: U.S. stock futures slip as Chinese prices climb

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By Steve Goldstein, MarketWatch

LONDON (MarketWatch) -- U.S. stock futures slipped Thursday on worries that China, the engine of the world economy, may have to slam the brakes to combat accelerating prices.

S&P 500 futures fell 2.2 points to 1,143.50 and Nasdaq 100 futures lost 2.5 points to 1,916.20. Futures on the Dow Jones Industrial Average sank 9 points.

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Stocks edged higher Wednesday on Wall Street, with government-backed financials American International Group and Citigroup extending gains, and technology companies also performing well. The blue-chip Dow Jones Industrial Average rose fractionally, lagging as the S&P 500 gained 0.5% and the Nasdaq Composite rose 0.8%.

Driven by a jump in food prices, the Chinese consumer price index, tracking inflation at the retail level, climbed 2.7% in February. Lending by Chinese banks rose 700.1 billion yuan ($102.5 billion) in February, while money supply as measured by M2 was up 25.5%.

"Today's monetary and inflation data out of China do not make for comfortable reading," said Diana Choyleva, of Lombard Street Research.

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"Given the force of the monetary expansion, it is highly likely that the People's Bank of China will have to tighten too much because it left it too late."

The Shanghai Composite finished the session up 0.1%, while most Europe indexes saw modest losses.

In the U.S., the data calendar features weekly jobless claims and January trade data.

In currencies, the British pound recaptured the $1.50 level, and in energy, crude-oil futures traded over $82 a barrel.

Devon Energy /quotes/comstock/13*!dvn/quotes/nls/dvn (DVN 71.85, +1.00, +1.41%) rose nearly 3% in the premarket after agreeing to sell Brazil, Gulf of Mexico and Azerbaijan assets to BP /quotes/comstock/13*!bp/quotes/nls/bp (BP 56.19, +0.15, +0.27%) for $7 billion and buying half of a BP oil-sands project in Canada for $500 million. BP drifted lower in London trade. See full story.

Meanwhile, Exxon Mobil /quotes/comstock/13*!xom/quotes/nls/xom (XOM 67.22, +0.44, +0.66%) will be holding its annual meeting. Exxon may outline its capital spending and stock-buyback plan, analysts say.

Outside of the oil patch, the International Air Transport Association halved its loss forecast for the global airlines industry in 2010 to $2.8 billion, from a December prediction of $5.6 billion, citing a much stronger-than-expected recovery in demand since the start of the year, particularly in Asia Pacific and Latin America.

Steve Goldstein is MarketWatch's London bureau chief.