Futures Shed Gains on Economic News

US stock futures turned flat to slightly negative after economic news showed gains in income doubled those in spending and consumer saving hit its highest level since September 2009.

The government said personal income gained 0.4 percent in Maywhile spending gained 0.2 percent, slightly higher than expected. But the 4 percent savings rate indicated caution among consumers as weakening data have raised the threat of a double-dip in the economy.

Futures had pointed to a higher open Monday after President Obama pledged to tackle the country's ballooning public deficit while at the G20 summit over the weekend.

Obama has previously warned that cutting spending too quickly could endanger the economic recovery. But Sunday's comments could now signal a shift to more aggressive cost-cutting measures.

The major indexes closed mixed Friday with banking shares gaining after negotiatiors agreed on a financial regulation reform bill, giving clarity to the sector's future risks. But the bill faced potential hurdles before its final approval after a Republican senator threatened to oppose it over the weekend.

Banking stocks looked for direction early Monday, trading mostly flat premarket as the death of Sen. Robert Byrd (D-W.Va.), the longest-serving member in the chamber, further threatened the bill's future.

US-traded shares of BP rose nearly 4 percent in premarket trading after threats eased that storm headed for the Gulf of Mexico could disrupt the oil spill cleanup efforts.

European stocks were higher Monday with banks getting a boost after political leaders at the G20 summit delayed talks of ramping up financial regulation to allow the recovery more time to become established. Asian indexes ended mixed after a muted trading session.

On the economic front, the week's key data will be out on Friday when the employment numbers for June are released. During Monday's session, personal income and spending figures for May will be out at 8:30 am New York time. Income is expected to have risen 0.4 percent, according to economists, while spending is seen rising 0.2 percent.

Meanwhile, Federal Reserve Governor Kevin Warsh will speak on the markets and the economy at 12:45 pm in Atlanta.

The earnings calendar is very light Monday, but Barnes & Noble , Micron and SMSC are due to report figures after the closing bell.

Looking to politics, Obama's Supreme Court nominee, Elena Kagan, is expected to face tough questions from Republicans at her Senate confirmation hearing.