PARIS, Sept 30 (Reuters) - European stocks are set to drop on Monday, losing ground for the fifth time in seven sessions, as a fresh political crisis in Italy and the prospect of a shutdown of the U.S. government spook investors. A downward revision to activity in China's factory sector was also dampening the mood. While the final HSBC Purchasing Managers' Index (PMI) did edge up to 50.2 in September, it was well down on the preliminary reading of 51.2, suggesting that a firm rebound in Chinese growth still remains elusive. At 0618 GMT, futures for Euro STOXX 50, for UK's FTSE 100, for Germany's DAX and for France's CAC were down 0.9-1.1 percent, while financial spreadbetters expected Italy's FTSE MIB to open down 1.7 percent. Italian government bond yields jumped while the euro lost ground. Italy's latest crisis was set off on Saturday when the five Cabinet ministers who are from former Prime Minister Berlusconi's party suddenly stepped down, threatening to bring down the government and force new elections seven months after the last vote. In Washington, chances that Republicans and Democrats could reach a deal on funding the government before the fiscal year ends at midnight on Monday seemed increasingly thin. On Sunday, the Republican-controlled House of Representatives passed a measure that ties government funding to a one-year delay of President Barack Obama's landmark healthcare restructuring law, while Senate Democrats have vowed to reject it. U.S. stock index futures were down 0.6-0.8 percent. Despite the negative sentiment on Monday, Capital Spreads trader Jonathan Sudaria said the expected drop could bring interesting entry levels for investors. "We've been in this knife edge situation multiple times since 2011 and although the herd is expected to head for the exit on the open of the European bourses, will Tesco sell less bread, BMW less cars and LVMH less handbags? No, and the more eagle-eyed traders may take this as an opportunity to snap up some bargains," he wrote in a note. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0621 GMT: LAST PCT CHG NET CHG S&P 500 1,691.75 -0.41 % -6.92 NIKKEI 14,455.80 -2.06 % -304.27 MSCI ASIA EX-JP 535.06 -1.21 % -6.55 EUR/USD 1.3491 -0.22 % -0.0030 USD/JPY 97.86 -0.39 % -0.3800 10-YR US TSY YLD 2.603 -- -0.03 10-YR BUND YLD 1.758 -- -0.02 SPOT GOLD $1,338.60 0.22 % $2.89 US CRUDE $101.55 -1.28 % -1.32 > GLOBAL MARKETS-Shares jolted by U.S., Italian politics > US STOCKS SNAPSHOT-Futures fall as government shutdown seems likely > Nikkei tumbles on global political concerns, exporters suffer > FOREX-Euro, dollar hit by political drama; yen, franc benefits > Gold gains as U.S. shutdown looms, headed for best qtr in a year > Copper eyes best quarter since March 2012 as global economy steadies > Brent falls below $108 on U.S. jitters, Iran COMPANY NEWS: SIEMENS Europe's biggest engineering firm is to shed 15,000 jobs over the next year, a third of them in Germany, as part of a 6 billion euro ($8.1 billion) cost cutting programme, a spokesman said on Sunday. INTESA SANPAOLO Italy's largest retail bank Intesa Sanpaolo ousted CEO Enrico Cucchiani on Sunday, after he clashed with the powerful chairman of the lender's supervisory board and several influential shareholders. TELECOM ITALIA Telecom Italia Chairman Franco Bernabe is considering resigning at a board meeting scheduled for Thursday, a source close to the situation said, as his plans to relaunch the indebted company may not get enough backing. ARCELORMITTAL The world's largest steelmaker said it will sell a majority stake in its Algerian operations to the Algerian state as part of a $763 million investment agreement. SANTANDER Banco Santander Brasil, seeking to jumpstart its flagging return on equity, will modify its capital structure by paying shareholders a one-off dividend of 6 billion reais and issuing foreign currency-denominated debt. AXA The insurer is set to confirm the closing of its previously announced private-equity spinoff early this week, the head of AXA Private Equity said in an interview with the Financial Times. VIVENDI Exclusive talks for Etisalat to buy Vivendi's 53 percent stake in Maroc Telecom have been extended to Oct. 31, the United Arab Emirates' former telecom monopoly said on Sunday. KPN Mexican phone company America Movil, embroiled in an increasingly complex bid for Dutch telecom KPN, said on Friday that it might go ahead with its formal offer next month. MERCK KGAA New data showed that the company's cancer drug Erbitux was more effective at prolonging the lives of bowel cancer patients than Roche's Avastin, Merck KGaA said. ROCHE An experimental Roche drug that seems to work particularly well against lung cancer in smokers may be a "game changer" for these normally difficult-to-treat patients, researchers said on Sunday. DEUTSCHE BOERSE The European Union's markets watchdog wants to charge foreign clearing houses seeking to cash in on new derivatives rules being introduced across the 28-country bloc, an EU document showed. DEUTSCHE WOHNEN, GSW IMMOBILIEN An extraordinary general meeting of Deutsche Wohnen shareholders is due, at which they are to vote on the issue of new shares to fund the planned takeover of GSW Immobilien. EDF France will finance a promised shift towards greener energy with cash freed up by an accounting change at EDF's nuclear plants that will boost the state-owned utility's profit and dividends, sources close to the matter said.