Stocks Slip on Europe Bank Fears, High Yen

Stock futures slipped to start the holiday-shortened week Tuesday after some fresh concerns about the health of European banks rattled overseas markets.

European markets fell after a report said the continent’s major banks have more potentially risky government debt on their books than was disclosed during stress tests earlier this year.

The dollar strengthened against the euro and investors bought U.S. Treasurys on the new European bank concerns.

Stocks worldwide dropped during the spring because of worries that mounting government debt in Europe would hurt banks’ ability to lend and stunt an economic recovery on the continent. That, in turn, would drag down a global rebound.

Investors could be taking their cues from overseas because there are few domestic economic reports due out this week that could sway traders. A barrage of mostly better-than-anticipated economic data sent stocks sharply higher last week. The reports helped push major indexes to their first winning week in a month.

The health of the U.S. economy has largely dictated trading since early August. Traders looking for new signs of the pace of recovery will get a look at regional economic activity when the Federal Reserve releases its beige book Wednesday. The Labor Department releases its weekly numbers on unemployment benefit claims Thursday.

Ahead of the opening bell, Dow Jones industrial average futures fell 50, or 0.5 percent, to 10,386. Standard & Poor’s 500 index futures fell 6.70, or 0.6 percent, to 1,096.80, while Nasdaq 100 index futures fell 8.00, or 0.4 percent, to 1,859.00.

Britain’s FTSE 100 fell 1 percent, Germany’s DAX index dropped 0.9 percent, and France’s CAC-40 fell 1.4 percent. Japan’s Nikkei stock average fell 0.8 percent.

With investors worldwide moving out of stocks, U.S. bond prices climbed. That sent interest rates lower.

The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.65 percent from 2.71 percent late Friday. Its yield is often used as a gauge to set interest rates on mortgages and other consumer loans.

STEPHEN BERNARD, AP Business Writer NEW YORK