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Futures Slide Amid Euro Zone Fears

CNBC.com
Friday, 26 Nov 2010 | 8:27 AM ET

Stock index futures pointed to a 1 percent drop at the open Friday ahead of a shortened post-holiday session, as investors fled from risk on worries that euro zone debt problems may continue to spread.

In Europe, the Portuguese government denied a news report suggesting it's being pressured into seeking a bailout from other euro zone countries and the European Central Bank, but market jitters continued.

Another report said the International Monetary Fund and European Union were considering plans to force senior bondholders to foot some of the bill for bailing out Ireland's banks.

European shares were sharply lower across the board on the back of the reports. Asian stocks were also in the red with South Korea's Kospi index seeing the worst of the declines. The price of oil and gold fell as the dollar rose against other major currencies.

China warned against military acts near its coastline ahead of U.S.-South Korean naval exercises that North Korea said risked pushing the region towards war, further rattling investors. The North shelled a South Korean island earlier this week.

Fears over debt spiraling out of control were expressed in the U.S. too, with FDIC chairwoman Sheila Bair writing, in an op-ed in the Washington Post, that the next crisis could start from Washington if the US does not work to cut its debt.

Volume is likely to be light as U.S. stock markets will close at 1 p.m. EST following the Thanksgiving holiday.

Meanwhile, shoppers prepared to kick off the holiday shopping season, with retailers hoping for strong sales on the all-important "Black Friday."

Resource-related stocks will be in focus as key base metals prices fell, pressured by a rise in margin requirements by the Shanghai Futures Exchange that prompted liquidation of speculative positions.

In company news, Boeing drew criticism from Qatar Airways and accused the plane maker, along with Air France, for failing to properly develop its 787 Dreamliner due to a growing trade war.

And private-equity firm Kohlberg Kravis Roberts secured the purchase ofDel Monte Foods for about $4 billion in cash.

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