US STOCKS-Futures drop as Washington stalemate drags on

Mon Oct 7, 2013 8:12am EDT

* Debt ceiling deadline draws closer

* Cooper Tire slumps on buyout squabble

* Alcoa, Yum Brands to report after the close

* Futures off: Dow 116 pts, S&P 14 pts, Nasdaq 22.75 pts

By Chuck Mikolajczak

NEW YORK, Oct 7 (Reuters) - U.S. stock index futures fell on Monday as the partial U.S. government shutdown continued with no signs of a softening in the positions of politicians over the debt-ceiling limit or budget impasse.

Republican House Speaker John Boehner vowed on Sunday not to raise the U.S. debt ceiling without a "serious conversation" about what is driving the debt, while Democrats said it was irresponsible and reckless to raise the possibility of a U.S. default.

The United States faces a deadline of Oct. 17 to raise its $16.7 trillion debt limit or risk an unprecedented debt default. The two issues of emergency funding for the government to operate and increase the U.S. borrowing authority started out separately in the House but have been merged by the pressure of time.

"Fear is mounting among investors that the upcoming debt ceiling deadline will be handled as poorly as the budget impasse has," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

"Given the lack of bipartisan workmanship, confidence is low and it is manifesting in poor market performance."

The S&P 500 has fallen two straight weeks and is down 2 percent from its all-time closing high of 1,725.52 on concerns about the effect of dysfunction in Washington on the economy.

S&P 500 futures fell 14 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 116 points, and Nasdaq 100 futures dropped 22.75 points.

Apollo Tyres of India and U.S.-based Cooper Tire & Rubber Co disagree over whether Apollo should pay a lower price in its $2.5 billion takeover, the latest hurdle in a deal beset by lawsuits, labor issues and unhappy Apollo investors. Cooper Tire shares slumped 10.2 percent to $26.50 in premarket trade.

Private equity firm KKR & Co LP is nearing a deal to acquire lifting equipment company Crosby Group LLC for around $1 billion, two people familiar with the matter said on Sunday.

Food waste recycler Darling International Inc said it would buy Vion Ingredients, a unit of privately held Vion Holding NV, for 1.6 billion euros ($2.18 billion).

The third-quarter earnings season gets under way this week as Alcoa Inc, the largest U.S. aluminum company, and Yum! Brands Inc are scheduled to report.

European stocks dropped in thin volumes, with one benchmark index hitting a four-week low as investors fretted over lack of progress in Washington's budget standoff.

Asian shares also declined, as Japan's Nikkei share average dropped 1.2 percent, hitting a one-month low and extending last week's 5 percent tumble.

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

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