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Automakers cliff hanger, bank woes slam futures

Stock index futures pointed to a sharply lower open on Monday as the Obama administration threatened bankruptcy for two major U.S. automakers and Spain had to rescue regional savings bank CCM.

The Obama administration grabbed control of the failing U.S. auto industry on Monday, forcing out General Motors Corp's (GM.N) CEO, pushing Chrysler LLC toward a merger and threatening bankruptcy for both.

GM shares tumbled more than 20 percent in pre-market trade while Ford (F.N) shed 1.8 percent to $2.79.

"Obviously today it's all about Detroit and the fear factor of bankruptcy," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"The administration forced out GM's CEO and the fear is ... this (could) set a precedent to spread to other companies that have taken money from the government."

European markets fell after Spain was forced into its first bank rescue since the financial crisis began and Germany and Britain also acted to shore up lenders as the sector awaited the brunt of the impact of rising bad loans.

Adding to the bank worry were comments from U.S. Treasury Secretary Timothy Geithner on Sunday that some banks still need large amounts of assistance and the government will have about $135 billion left after other banks give back some of the bailout money.

Banks shares fell in pre-market trade, as Citigroup (C.N) slid 7.3 percent, Bank of America (BAC.N) dropped 7.9 percent, Wells Fargo (WFC.N) shed 6.2 percent and JP Morgan Chase & Co (JPM.N) fell 4.3 percent.

S&P 500 futures fell 18.30 points and were below 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 slid 180 points, and Nasdaq 100 futures were off 25.25 points.

GM CEO Rick Wagoner, who had presided over the company's rapid decline in the past five years and had run the automaker since 2000, was forced out at the request of the autos panel headed by former investment banker Steven Rattner. A majority of GM's board will also be replaced.

Wall Street capped a strong week on a down note on Friday as investors booked profits in the wake of the recent upward surge and bank shares dropped after bank executives indicated March had been a tougher month for them than the previous two.