Wall St Week Ahead: GM, banks' fate to keep investors on edge

By Leah Schnurr and Deepa Seetharaman

NEW YORK, March 6 (Reuters) - With stocks mired in multi-year lows and the fate of General Motors and banks hanging in the balance, investors are unlikely to curb their flight from risk next week, putting Wall Street on track for another brutal sell-off.

One focal point will be a meeting between the U.S. auto task force and GM (GM.N), Chrysler and officials from the United Auto Workers in Detroit next week after auditors raised doubts about GM's ability to survive outside bankruptcy.

Uncertainty over the plan to salvage banks will also hang over the struggling sector until more concrete details from Washington are revealed, leaving investors to fret that companies that were once pillars of the financial system will have to be nationalized.

The weak economy will likely be confirmed by a handful of economic reports, including a government report on February retail sales and a survey of consumer sentiment.

"There are, unfortunately, no guideposts to a lot of the market to allow investors to get a better sense of direction of where the market is going, where corporate America is going," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"Short of that, we're going to likely have to rely on Washington. Unfortunately, it just seems like Washington's relationship with the stock market is strained."

"PAINFUL" MARKET

With the Dow and S&P trading at 12-year lows, and the Nasdaq sliding to 6-year lows, market watchers will be looking for signs of whether a bottom has been found, or if indexes still have another leg down to go.

This week was the fourth week of declines for all three major U.S. stock indexes, as the Dow Jones industrial average .DJI dropped 6.2 percent and the Nasdaq composite index .IXIC fell 6.1 percent. The Standard & Poor's 500 .SPX slid 7 percent, its worst week since November.

"I've been in the business since 1963 and I've truthfully never seen a market that is so discouraging or painful," said Carl Birkelbach, chief executive officer of Birkelbach Investment Securities in Chicago.

"I've been through a lot, but this is the worst I've seen."

Already cheap bank stocks continued their tumble this week. The stock price of Dow component Citigroup (C.N), once the world's most valuable bank by market capitalization, fell under $1 for the first time, reigniting anxiety over the bank's health and that of the entire banking sector.

Clarity on how toxic assets will be cleared off banks' balance sheets and how those assets will be valued is key to stabilizing the financial sector and seeing markets manage a sustainable recovery, analysts said.

"In order to move forward, we need (Treasury Secretary) Geithner to come out and tell us the answer to the question: 'How do you value the assets?'," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

"We may be happy about it, we may not be happy about it, but at least we'll know."