US STOCKS-China, Fed concerns cause futures to tumble

Mon Jun 24, 2013 8:12am EDT

* Tenet Health to buy Vanguard Health for $4.3 bln

* Barrick Gold to lay off workers

* Keynote Systems to be acquired for $20 per share

* Futures off: Dow 142 pts, S&P 17.1 pts, Nasdaq 23 pts

By Chuck Mikolajczak

NEW YORK, June 24 (Reuters) - U.S. stock index futures fell on Monday after the S&P 500 suffered its worst weekly decline in two months on concerns the U.S. Federal Reserve's stimulus may be drawing to a close and a cash crunch in China that could slow even further its growth.

Banking shares in China tumbled to their biggest daily loss in almost four years after the People's Bank of China said banks needed to do a better job of managing their cash and lending as the central bank attempts to move the world's second largest economy away from credit-driven investment.

The S&P 500 has fallen 2.3 percent in June, putting the benchmark S&P index on track for its worst monthly performance since May 2012. The index is down 4.6 percent from its all-time closing high on May 21.

Concerns the Fed may be planning to reduce its stimulus pushed up yields on 10-year Treasuries to 2.6 percent, its highest level since August 2011.

"Coming off of a trying week on Wall Street, investors are faced with concerns about China and their chosen course of action," said Andre Bakhos, director of market analytics at Lek Securities in New York.

"The market is shaken whenever thoughts of easy money ending are mentioned. Talk of shutting off the spigot unnerves investors."

S&P 500 futures lost 17.1 points and were well 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 declined 142 points, and Nasdaq 100 futures dropped 23 points.

U.S. hospital operator Tenet Healthcare Corp will buy smaller rival Vanguard Health Systems Inc for $4.3 billion, or $21 per share including debt to expand into new geographies. Vanguard shares jumped 66.3 percent to $20.57 in premarket trade.

The rising interest rates served to dent gold prices, weighing on mining stocks, while other commodities were also pressured by strength in the dollar.

Barrick Gold Corp will lay off up to a third of its corporate staff at its headquarters in Toronto and other offices, sources said, as the world's top bullion producer intensifies a downsizing plan amid a slump in the price of gold. U.S.-listed shares dipped 2.1 percent to $16.53 in premarket trade.

Freeport McMoRan Copper and Gold Inc has restarted some operations at the world's second biggest copper mine after receiving approval from the Indonesian government.

China's Sinopec Group has agreed to buy Marathon Oil Corp's Angolan offshore oil and gas field for $1.52 billion, Asia's largest refiner producer said.

Keynote Systems Inc said it had agreed to be acquired by an affiliate of private equity firm Thoma Bravo LLC for about $395 million, or $20 per share. Keynote shares surged 46.6 percent to $19.80 before the opening bell.

Miners led a tumble in European stocks, with one gauge of investor concern hitting a four-month high on mounting worries over China's banking system and the economic outlook for a world with less stimulus.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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