Futures declined Tuesday amid growing concerns that the threat of a Greek default will lead to another banking crisis in Europe.
Among European banks, German financial giant Deutsche Bank said it expects third-quarter earnings to be substantially lower than expectedand Franco-Belgian Dexia plunged sharply amid worries the firm would need to be broken up.
Dexia's board held an emergency meeting in which it tasked CEO Pierre Mariani with preparing measures to resolve structural problems that were harming its operations.
Meanwhile both the Belgian and French governments pledged to take all measures necessary to protect Dexia’s account holders. According to Belgian newspaper reports, the bank could be carved up and its “good” assets sold.
The weakness in European banks put downward pressure on U.S. financials including Morgan Stanley , BofA and Citigroup . On Monday, Morgan Stanley closed at its lowest since Dec. 2008.
Greece remains in focus as well. Euro zone finance ministers met in Luxembourg on Monday evening and agreed that Greece could wait until mid-November to get the next instalment of emergency aid, Reuters reported.
And adding to woes, Goldman Sachs slashed its GDP outlook for advanced economies in 2012, saying it expects a growth of 1.3 percent compared to its previous view of 2.1 percent.