Stock futures pullback day after big rally as China raises bank reserve requirements
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NEW YORK (AP) - Stock futures slipped Friday after China moved to curb inflation after days of speculation.
The Chinese government told banks they must hold more reserves. The move is aimed at cutting down on lending to avoid speculative bubbles and curb inflation. Inflation in China shot up to a more than two-year high last month.
There is also growing expectation China will raise key interest rates soon as part of the inflation fight.
Raising bank reserve requirements and hiking interest rates, though, could also slow China's robust economy. Expansion in China has been vital to global growth and corporate profits because of sluggish recoveries elsewhere around the world, particularly in the U.S. and parts of Europe.
It was the second time China forced banks to raise reserves in the past two weeks.
With no major economic reports due out in the U.S. Friday, investors were again focusing on overseas news to help dictate trading.
Ahead of the opening bell, Dow Jones industrial average futures fell 28, or 0.3 percent, to 11,148. Standard & Poor's 500 index futures fell 2.90, or 0.2 percent, to 1,194.80, while Nasdaq 100 index futures fell 5.75, or 0.3 percent, to 2,128.50.
Stocks were set to pull back a day after the Dow surged 173 points. Thursday's rally was tied to growing confidence Ireland was close to agreeing to the parameters of a bailout to help it avoid possible default on its mounting debt. Strong demand for General Motors Co.'s initial public offering also sparked buying in stocks, which had struggled earlier in the week.
Irish leaders continued to meet Friday with European Commission, European Central Bank and International Monetary Fund leaders to hammer out a support plan. Ireland was crippled after it took over three national banks following a collapse of the country's housing market.
It is on the brink of joining Greece as the second European country to need financial support because of a bailout. However, Greece's rescue was made necessary by runaway spending.
There are still lingering concerns that other countries like Portugal, Spain and Italy could also eventually need financial aid as their economies struggle and questions remain about how they will refinance or repay debt.
But confidence that Ireland will get needed support helped strengthen the euro Friday. It rose back above $1.37, after falling below $1.35 earlier this week.
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