Dow futures fall 200 points as oil extends slide

U.S. stock index futures pointed to a sharply lower open on Tuesday after a sharp fall in oil and iron ore prices weighed on sentiment ahead of next week's Federal Reserve meeting.

Dow futures fell 200 points as a fresh decline in oil prices weighed on energy and mining stocks.

Oil extended losses from Monday's session in early morning trade after earlier attempting to trade higher. Internationally traded Brent futures dipped below $40 a barrel, while U.S. crude briefly fell more than 2 percent to below $37 a barrel.

Traders work on the floor of the New York Stock Exchange.
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Traders work on the floor of the New York Stock Exchange.

Earlier, crude prices edged up from nearly seven-year lows on Tuesday as China reported strong commodity imports despite economic weakness but, overall, the market remained weak due to global oversupply compounded by the Organization of Petroleum Exporting Countries' decision to keep output high.

Benchmark Brent and WTI futures both fell over 6 percent the previous session to reach 2015 lows, and they are closing in on levels last seen during the credit crunch of 2008/2009. Should they break through 2008/2009 lows, the next downward target would be levels not seen since the early 2000s.

Spot iron ore also fell to a fresh decade-low below $40 a ton to a fresh decade low.

"Yesterday's slide in oil prices, takes most of the headlines. In terms of global significance this may be a bigger deal than the slide in iron ore prices, but the latter represents a bigger percentage slide over almost any time frame," said global strategist at Societe Generale, Kit Juckes.

U.S. bond auctions are also being closely watched by markets, as yields move ahead of the Fed's plans to liftoff from zero interest rates. The Treasury auctions one- and 12-month T-bills as well as three-year notes Tuesday.

Earnings due for release on Tuesday include AutoZone, Toll Brothers before the bell, with Costco, Dave & Buster's, Krispy Kreme and Smith & Wesson all due after market close.

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In Europe, equities were trading more than 1 percent lower Tuesday amid the rout in oil prices.

Reuters contributed to this report.