Futures Trim Gains After Economic News

Futures pared gains Monday after a gauge of manufacturing in New York State showed the sector contracted for the third consecutive month in August.

The New York Empire State manufacturing index fell to minus 7.72, their lowest level since Nov. 2010, according to the New York Federal Reserve. Economists polled by Reuters had expected a reading of zero.

The National Association of Home Builders/Wells Fargo is also set to issue its housing market index for August at 10:00 am in New York, with analysts’ expectations on briefing.com suggesting the index will remain unchanged from the prior month.

European investors were awaiting the results of a meeting between Germany’s chancellor Angela Merkel and French president Nicolas Sarkozy on Tuesday, where they are expected to discuss the ongoing euro zone debt crisis. Both leaders came under increasing pressure over the weekend as Italy and Britain called for them to agree to move forward on greater European fiscal unity and a European Central Bank backed Euro bond.

The weekend also saw Robert Zoellick, president of the World Bank, warn that world markets had entered a ‘new danger zone’ and said investors had lost confidence in the economic leadership of several key countries.

Motorola Mobility surged after Google said it will acquire the wireless phone maker for about $12.5 billion in cash, a move to bolster the Android mobile phone software.

Meanwhile, Bank of America gained after the company said it plans to exit the credit card business in Canada and Europe.

Time Warner Cable said it will acquire Carlyle Group's cable operator Insight Communicationsfor $3 billion in cash, to broaden its presence in the midwest.

And Transocean launched a $1.43 billion bid for Norway's Aker Drilling.

On the earnings front, Lowe's reported weaker-than-expected salesas homeowners delayed big renovations amid an anemic U.S. economy.

Meanwhile in Asia, Japan's economy shrank much less than expectedin the second quarter as companies made strides in restoring output after the devastating earthquake in March.

Coming Up This Week:

MONDAY: Housing market index, Fed's Lockhart speaks, credit card default rates reported TUESDAY: Housing starts, import/export prices, industrial production, Sarkozy & Merkel meet; Earnings from Home Depot, Wal-Mart, Saks, TJX and Dell
WEDNESDAY: Weekly mortgage apps, PPI, oil inventories; Earnings from Deere and Target
THURSDAY: CPI, jobless claims, existing home sales, Philadelphia Fed survey, leading indicators, money supply, Forest Labs shareholder mtg; Earnings from Sears, Hewlett-Packard and Gap
FRIDAY: Fed's Pianalto speaks, Google IPO anniversary

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