Futures Point to Further Slide; BP Tumbles

US stock index futures indicated a sharply lower open for Wall Street on Tuesday, with European markets also struggling, following an aggressive sell-off last week that served as a harsh end to the Dow's biggest May point drop in history.

In percentage terms, the Dow Jones had the worst performance since 1940.

US-traded shares of BP shares fell 14 percent—the biggest intraday drop in almost twenty years—as the company announced that its “top kill” attempt to curtail the worst oil spill in U.S. history hasn’t succeeded.

European markets slid on news that the rate of manufacturing expansion in China and Europe slowed, and the euro extended its longest monthly decline versus the dollar in 10 years. The dollar rose 0.67 percent against a basket of foreign currencies.

Pressure in the credit markets continued to weigh on the markets.

While three-month Libor actually slipped a bit, the Ted Spread , or the difference between the Libor rate and three-month Treasury bills, grew 4 percent.

Hewlett-Packard shares also slipped, dropping 1 percent premarket as the company said it was going to spend $1 billion on a relaunch of its enterprise serviceswhile cutting 6,000 employees.

Shares of ev3 jumped 18 percent premarket on news that Covidien has agreed to the buy the vascular treatment company for $2.6 billion.

Asian stocks ended lower on Tuesday with creeping suspicion that a peak in the recovery has passed and slowing growth in China and Europe in the second half of the year will be obstacles to risky trades. The MSCI Asia Pacific Index fell 1 percent today, the first drop in five days.

The company is struggling to contain the oil spill which occurred on April 20th in the Gulf of Mexico. Miners also fell, with Rio Tinto and BHP Billion shares down several percent each.

The ECB said that European banks will have to write off more loans in 2010 than in 2009 and their ability to sell bonds may be hindered as governments need to subsidize fiscal deficits.

On the economic data calendar, April’s construction spending figures are scheduled for release at 10 am New York time, with economists forecasting an increase of 0.1 percent, down from a rise of 0.2 percent the month prior.

Also at 10 am, investors will be closely watching May’s Institute for Supply Management factory index, with economists’ forecasting a drop to 58.9 this month, down from 60.4 in April.

While the ISM is just a survey of purchasing managers, it a provides broad indications of trends in the market.

Investors will look to whether manufacturing expansion in the US has suffered similarly as it has recently in China and Europe.

There are no major corporate earnings releases scheduled for Tuesday.

Prudential fell 1.1 percent premarket on news that AIG rejected a request from the U.K.’s largest insurer to cut the price of its $35.5 billion offer for AIA Group Ltd., fueling speculation the takeover won’t go ahead. A source close to AIG told CNBC the insurer will press on with an IPO, expected by October. AIG shares fell 1.8 percent premarket.

Europe’s largest discount airline Ryanair saw its shares advance after it announced that it will pay its first dividend on the back of an annual profit.