By Leah Schnurr
NEW YORK (Reuters) - Wall Street was poised to plummet at the opening bell on Friday, after U.S. stock index futures dove so steeply that they had to be frozen at several points as global markets were battered by signs the global economy is in the throes of recession.
Global markets were down 4 percent as measured by the MSCI's all-country world index, while panicked investors moved to liquidate risky positions. Japan's Nikkei index ended down nearly 10 percent and European shares lost 8 percent.
In New York, December Dow Jones futures were down 6.3 percent, Standard & Poor's 500 futures were off 6.6 percent and Nasdaq 100 futures were down 6.8 percent.
All three contracts lost the maximum amount permissible before the start of futures trading in the United States.
Both the New York Stock Exchange and Nasdaq said trading would open as normal at 9:30 a.m. EDT.
"The markets are basically following grim news that's coming out of the global economy ... It's basically feeding on itself," said Peter Cardillo, chief market economist at Avalon Partners in New York, adding "... right now the markets are in the process of discounting a global recession and how severe it's going to be."
According to Reuters data, December S&P futures hit a low of 855.20, while Dow Jones futures touched a low of 8,224 -- the lowest levels at which both contracts could trade in a session. The Nasdaq fell to 1,168.50.
Jeremy Hughes, a spokesman for the Chicago Mercantile Exchange in London, said both contracts were "limit down."
"The limit is calculated at roughly 5 percent down. At that point it can't go any further down but it is still accessible and can go up again," he said.
"When the U.S. futures open in Chicago (at 9:30 EST), the contract becomes available again, so (it could go) further down another 5 percent down, so 10 percent in total," he added.
During regular trading, if the Dow Jones falls 1,100 points, or 10 percent, before 2 p.m., the drop will trigger a one hour halt. Between 2 and 2:30 p.m., trading would be halted for 30 minutes, while there would be no halt after 2:30 p.m.
In the event of a 2,200 point dive, or 20 percent, before 1 p.m., trading would be halted for two hours. Between 1 and 2 p.m., trading would be halted for an hour, while a drop after 2:00 p.m. would cause the market to close.
Financial shares were poised to see deep losses, with bank shares tumbling 6.1 percent before the bell, but selling looked likely to be indiscriminate across all sectors as investors move to raise cash.
A cascade of profit warnings from major Asian companies slammed Tokyo's Nikkei during its Friday session, sending it down 9.6 percent. European equities fell by almost 10 percent at one point to hit their lowest since May 2003.
Heightening worries of a recession, data showed the British economy shrank 0.5 percent in the third quarter, the first contraction in 16 years and substantially more than expected.
"I think that's the first sign that GDP (gross domestic product) across the world is probably going to turn negative in the third quarter and we're going to see it in many, if not most, countries," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont, describing the dive in U.S. stock futures as "panic".
Bringing fears to a head, China said its outlook was grim while major global companies issued profit warnings.
Data on September U.S. existing home sales is due out at 10 a.m. EDT.
(Additional reporting by Amanda Cooper in London; Editing by James Dalgleish)
