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By: CNBC.com | 20 Feb 2009 | 09:20 AM ET
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Stock index futures pointed to a weak open Friday with banks set to take a hammering on growing fears of nationalization for Citigroup and Bank of America.

Shares of the two Wall Street giants both fell in pre-market action as traders and analysts speculated about a coming wave of government ownership in the financial sector. Citigroup [C  Loading...      ()   ] was nearly 7 percent lower and Bank of America [BAC  Loading...      ()   ] was nearly 6 percent lower ahead of the open.

This comes after as selloff Thursday that saw the Dow crash through its November low to settle at a six-year low.

Traders have been clamoring for details of the Obama administration's stimulus plans, which were expected to assuage market jitters. But when specific plans for the mortgage-rescue plan emerged, stocks sold off.

"This market sold off quite frankly because it did not like the plan period," Jack Bouroudjian, a principal at Brewer Investment Group, told CNBC.

And, while tech stocks had a harder selloff than financials yesterday, Bouroudjian said it all comes down to the banks.

"The banking sector is the heart blood of capitalism. Unless it gets healthy, the rest of the sectors are going to spin their wheels," he said.

Futures pared their losses somewhat after an inflation gauge came in as expected. Consumer prices rose 0.3 percent last month, the first gain since July; core CPI, which excludes volatile food and energy costs, rose 0.2 percent.

>> CPI Breakdown: Where Costs are Rising

Switzerland’s tax and banking laws came under sharp scrutiny as US authorities widened a probe into UBS [UBS  Loading...      ()   ] by suing for details of 52,000 of its clients.

The Swiss bank agreed to large fines earlier in the week in an attempt to settle criminal charges. UBS shares fell 14 percent premarket.

Bank of America is also under legal scrutiny, as chairman and chief executive Kenneth Lewis was subpoenaed by New York Attorney General Andrew Cuomo last week. Cuomo is investigating whether the bank violated state law by withholding information from investors, a source familiar with the case told CNBC.

"Would I be buying the equity in Citi and Bank of America here? I mean, it's very cheap, but I think the banks survive; I don't think the equity survives," Steve Auth, CIO of global equities at Federated Investors, told CNBC.

(Click on the video at left to watch the interview.)

Tough times continued for the auto sector as General Motors' [GM  Loading...      ()   ] loss-making unit Saab said it would seek legal protection from creditors as it scrambles to restructure and gather new funding.

And missing Texas billionaire Allen Stanford has been found in Fredericksburg, Virginia and served with a complaint accusing him of an $8 billion fraud.

In earnings, Lowe's [LOW  Loading...      ()   ] shares dropped 4 percent premarket after the home improvement retailer reported a sharp drop in quarterly profit. Earnings fell to 11 cent a share, just below analyst estimates.

Also, Barrick Gold [ABX  Loading...      ()   ] shares gained more than 2 percent after the company beat analyst estimates with a profit of 32 cents per share.

JCPenney [JCP  Loading...      ()   ] also is reporting earnings, while January’s consumer price index will be released at 8.30 am New York time.

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