Wall Street set for lower open as Europe optimism fades

NEW YORK (Reuters) - Stock index futures pointed to a lower open on Wednesday as enthusiasm waned after strong bank demand for the European Central Bank's record funding operation and fears over the debt crisis resurfaced.

Banks borrowed 489 billion euros ($641.08 billion) at the ECB's first-ever offering of three-year funding, boosting optimism that a credit crunch can be averted.

But the optimism faded as European stocks gave back early gains. The FTSEurofirst 300 <.FTEU3> shed 0.3 percent and the eurofell to a session low against the dollar, and German government bonds turned positive on the day. <.EU>

Bunds have fallen in recent days on hopes that banks would use some of the ECB money to buy high-yielding Italian and Spanish debt.

But an Italian banking group said banks wouldn't increase their exposure to sovereign debt even after the ECB offering because European Bank Authority rules discourage it.

"They left it up to each of the banks to do what they need -- there can't be one general plan for all 500 banks they give the money to. So it's up to each bank where to put it most efficiently," said Cort Gwon, Chief Strategist at HudsonView Capital Management in New York.

As the Christmas and New Year holidays approach, equities will likely to become more volatile as volume peters out.

"The market can get whipsawed because of the illiquidity and the headline risk, both ways, both good and bad," said Gwon.

S&P 500 futures fell 2.9 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 lost 13 point, and Nasdaq 100 futures shed 5.75 points.

U.S.-listed shares of Research in Motion Ltd jumped 8.2 percent to $13.55 in premarket trade after Reuters reported the BlackBerry maker has rebuffed takeover overtures.

Oracle Corp slumped 9.9 percent to $26.27 premarket after posting earnings late Tuesday that fell short of Wall Street's forecasts for the first time in a decade.

On the economic front, the National Association of Realtors will release existing home sales for November at 10 a.m. EST (1500 GMT). Economists in a Reuters survey forecast a 5.05 million annualized unit total versus 4.97 million annualized units in October.

Walgreen Co lost 7 percent to $31.16 premarket after the largest U.S. drugstore chain posted lower quarterly profit on pressured margins.

Contract electronics manufacturer Jabil Circuit Inc posted first-quarter revenue below estimates and sees lower revenue in the second quarter. Shares fell 4.8 percent to $19 in premarket.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)

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