By Angela Moon
NEW YORK (Reuters) - U.S. stocks indexes were set to drop more than 1 percent at the open on Monday as fears of a credit rating downgrade of French banks and the lack of a solution to Greece's debt problem heightened concerns about the euro zone's debt crisis.
Concerns that the credit crisis in Europe may threaten to spill over into U.S. banks have been pressuring Wall Street for several months, sending shares of major banks to their historical lows in recent weeks.
France's top banks are bracing themselves for a likely credit rating downgrade from Moody's, sources close to the situation said on Saturday, further complicating their efforts to assure investors they are riding out the tensions in funding markets.
Several sources said BNP Paribas
Adding to the gloom was the failure of the weekend's meeting of finance ministers from the Group of Seven industrialized nations to come up with any fresh proposals for boosting global growth.
Greece on Sunday slapped a new tax on real estate to plug a 2011 budget hole, please international lenders and secure a key new loan tranche as concerns mounted in Europe over its euro zone membership.
"The European sovereign debt issue is increasingly becoming a concern... Without any data today to brush off some of the issues, the market is entirely focused on this," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
S&P 500 futures fell 16.7 points and were below 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 fell 160 points, and Nasdaq 100 futures dropped 30.75 points.
The S&P 500 index could revisit its lows of August, according to Ari Wald, BBH's technical market analyst.
"The important downside level for the S&P 500 remains its climactic August low at 1,100," Wald said. "A bearish flag pattern, typically a continuation formation that signals a pause amid a strong trend, indicates that it is likely that the index tests this level in the near-term."
The U.S. Federal Reserve has quizzed Capital One Financial Corp
The newspaper also said Amazon.com Inc
European stocks slumped, led by banking stocks, while Japan's Nikkei average <.N225> dropped to a fresh 2-1/2 year closing low.
U.S. stocks closed lower on Friday, rattled by the resignation of Juergen Stark, a member of the European Central Bank's executive board and governing council, which added to concerns about policymakers' ability to deal with Europe's debt crisis.
(Editing by Padraic Cassidy)
