US STOCKS-Futures flat, caution about credit, economy

By Kristina Cooke

NEW YORK, Feb 15 (Reuters) - U.S. stock index futures were little changed on Friday after the previous session's sharp sell-off, with investors cautious about the outlook for the U.S. economy and deteriorating credit markets.

U.S. stocks dropped on Thursday after the Federal Reserve chairman said that he sees sluggish economic growth ahead and a credit ratings downgrade of FGIC, the fourth-largest bond insurer. The downgrade could lead to more write-downs at banks that own securities covered by the company.

Shares of Kraft Foods Inc (KFT.N) and U.S.-listed shares of UK drug maker GlaxoSmithKline (GSK.L) (GSK.N) will likely be a bright spot after billionaire Warren Buffett's Berkshire Hathaway Inc (BRKa.N) (BRKb.N) said it had taken stakes in the companies. Both stocks were up in Europe.

"Sentiment is guarded. Reality is beginning to set back in that there's no quick fix to this financial mess. We're going to see more write-downs, and the clock is ticking at the bond insurers in terms of a rescue plan," said Matt Kaufler, co-manager of the Touchstone Value Opportunities Fund in Rochester, New York.

"Kraft will probably be active. There's a sort of halo effect around companies that Warren Buffett takes a stake in."

S&P 500 futures SPc1 fell 0.40 point, about in line with fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures DJc1 rose 8 points. Nasdaq 100 NDc1 futures fell 1.50 points.

Former Federal Reserve Chairman Alan Greenspan on Thursday said the U.S. economy is "clearly on the edge" of a recession. Greenspan said the economy will continue to erode until there is a stabilization of U.S. housing prices.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.7 percent, while the MSCI measure of Asian stocks outside Japan .MIAPJ0000PUS dipped 0.1 percent.

Data on industrial production for January due at 9:15 a.m. (1415 GMT) could shed more light on how the manufacturing sector is holding up. Reuters/University of Michigan preliminary data on consumer confidence for February follows at 10 a.m.

Kraft's Frankfurt-listed shares were up 1.8 percent, while GlaxoSmithKline was up 1.7 percent in London.

U.S. stocks ended a three-day string of gains on Thursday as the Dow Jones industrial average .DJI fell 1.4 percent, the Standard & Poor's 500 Index .SPX lost 1.3 percent and the Nasdaq Composite Index .IXIC surrendered 1.7 percent. (Editing by Kenneth Barry)