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Premarket: Futures flat on weak Japanese economic data

Traders work on the floor of the New York Stock Exchange, July 31, 2012.


U.S. stock index futures were flat on Monday after a six-day winning streak for the S&P 500 as investors weighed expectations for more central bank stimulus after Japan showed economic weakness.

As traders speculated the market was pausing from its rally, data showed Japan's economy expanded just 0.3 per cent in April-June, half the pace expected, raising doubts about the strength of the recovery. Meanwhile, Europe's debt crisis weighed on worldwide demand.

Global economic weakness has kept alive investors' hopes for stimulus actions from central banks.

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Late on Friday, the president of the San Francisco Federal Reserve said the Fed should launch a fresh round of bond buying to lower the U.S. unemployment rate more quickly, fuelling speculation that the central bank could soon unveil a new round of quantitative easing.

The benchmark S&P index has risen 2.99 per cent over the past six sessions, its longest rally since December 2010, but the index has risen only 0.3 per cent in the past three sessions as the S&P hovers near levels not seen since early May.

"The market has had a small, positive consolidation just above the key 1,400 level, with no clear theme in either direction. The market is biding time," said Andre Bakhos, director of market analytics at Lek Securities in New York.

"With no economic data scheduled today, investors will look to the rest of a busy week for more direction."

S&P 500 futures were up 0.5 point and were roughly even with 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 were unchanged and Nasdaq 100 futures added 3.5 points.

Swiss private bank Julius Baer is to buy Bank of America's Merrill Lynch wealth manager outside the United States, paying 860-million Swiss francs ($882-million U.S.) for the loss-making business to boost its assets managed by 40 per cent and backing the deal with plans to raise 1.19-billion Swiss francs ($1.22-billion U.S.) in new capital. Bank of America shares gained 0.8 per cent to $7.80 in premarket trading.

Motorola Mobility has told employees it plans to slash 20 per cent of its workforce and shut down nearly a third of its offices worldwide, the New York Times reported. Shares of parent company Google Inc advanced 1.5 per cent to $651.61 in trading before the open.

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European shares pared their losses in very light trade as investors weighed concerns over global economic growth against expectations of further central bank stimulus. Asian shares edged lower as the Japan data provided investors with further evidence of slowing global growth.

Sysco Corp on Monday is set to be the first S&P 500 company of the 22 index components to post earnings this week.

According to Thomson Reuters data, of the 449 companies in the S&P 500 that have reported second-quarter earnings to date 68 per cent have reported earnings above analyst expectations, matching the beat rate for the last four quarters.

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