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US STOCKS-Wall St to open flat on oil uncertainty

Published 03/08/2011, 09:04 AM
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* Oil eases on talk of a production hike

* McDonald's posts February sales

* Futures: Dow off 2 pts, S&P up 1.2, Nasdaq flat

By Chuck Mikolajczak

NEW YORK, March 8 (Reuters) - U.S. stock index futures pointed to a flat open on Tuesday as more turmoil in Libya indicated a resolution was not close and a drop in oil prices failed to ease investor worry about the economic recovery.

Libyan warplanes struck at rebel forces behind the war's eastern front lines on Tuesday, stepping up the government offensive to roll back early gains in the insurrection against Muammar Gaddafi.

Brent crude dipped 1 percent to $113.87 a barrel after Kuwait's oil minister said OPEC was in discussions to increase production for the first time in two years. U.S. oil futures rose 0.2 percent to $105.69.

Equities have been closely tied to oil prices recently, as investors worried that consumer spending may be curtailed by higher oil and gas prices, choking off an economic recovery.

"At the moment, I think we just remain nervous -- the situation in the Middle East is still fluid, crude oil isn't coming off very much," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.

"This is dragging out longer than the market may have expected. We'd like to see a little more clarity there, and we certainly don't have that."

S&P 500 futures gained 1.2 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 2 points, and Nasdaq 100 futures were flat.

The Nasdaq composite index dropped 1.4 percent Monday and closed just above its 50-day moving average. If the index falls below that widely followed technical gauge, that could signal more declines in the technology sector, which had helped lead a market rally.

The S&P 500 lost momentum as it closed Monday below a trend line it had been holding for more than six months, which connects the low in late August with the one in late November.

Five of the last nine closing levels of the benchmark index fell in the 1,306-1,310 area, which also includes the 23.6 pct Fibonacci retracement of the spike from Dec. 1 to Feb. 18 -- the latest leg of the equities rally. This area could provide support for future trades.

McDonald's Corp slipped 0.8 percent to $75.70 in premarket trade after the fast-food restaurant chain said global sales at established restaurants in February rose 3.9 percent, but U.S. sales were weaker than other regions.

Boeing Co advanced 0.8 percent to $71.45 premarket after the plane maker sealed deals worth $10 billion with two airlines in China, the world's fastest growing market, and could lead to orders for more than 2,000 aircraft over the next five years.

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