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U.S. Stock Futures Retreat

U.S. stock-index futures slipped, indicating the benchmark Standard & Poor’s 500 Index will pare its biggest advance in a week, as investors considered what the Federal Reserve may do to support the economic recovery.

Bank of America Corp., the biggest U.S. bank, declined 2.2 percent in German trading. Citigroup Inc. slid 0.7 percent and Goldman Sachs Group Inc. lost 0.8 percent.

Futures on the Standard & Poor’s 500 Index expiring in September lost 0.7 percent to 1,150.2 at 11:39 a.m. in London. Dow Jones Industrial Average futures expiring the same month slumped 78 points, or 0.7 percent, to 11,063.

The S&P 500 climbed 3.4 percent yesterday as investors speculated that the Fed will act to spur economic growth.

Fed Chairman Ben S. Bernanke and other central bankers meet on Aug. 26 in Jackson Hole, Wyoming, for an annual conference. At last year’s meeting, Bernanke signalled that the Fed would start a second round of asset purchases, known as QE2, that boosted stock markets.

“Some investors are worried Bernanke might not hint an intervention after all, but the other option is that he says something and that it doesn’t work,” said Henrik Drusebjerg, a senior strategist at Nordea Investment Management in Copenhagen. “There’s a big question mark as to whether QE3 will actually do any good for the real economy.”

In Europe, German business confidence fell to its lowest level in more than a year as a global slowdown and Europe’s sovereign-debt crisis damped the outlook for economic growth.

Bank of America slid 2.2 percent to $6.16 and Citigroup retreated 0.7 percent to $27.12 in composite European trading. Goldman Sachs slipped 0.8 percent to $106.04 in Germany. Goldman Sachs and Citigroup plan to market bonds backed by commercial mortgages in September, according to a person familiar with the transaction. The banks may add loans to the $1.5 billion deal, which they withdrew in July when S&P pulled its ratings.

La-Z-Boy Inc. slumped 11 percent to $6.80 in after-hours trading after the maker of living-room recliners reported first- quarter revenue of $280.1 million, missing the average analyst estimate of $284.3 million in a Bloomberg survey.

The S&P 500 plunged 16 percent from July 22 through Aug. 19 in its biggest four-week loss since March 2009. The gauge closed at 11.6 times the estimated earnings of its constituent companies yesterday, near the lowest valuation since March 2009. The four-week worldwide equity rout has erased $8 trillion from share values as Europe’s debt crisis and worsening economic reports raised concern that the global economic recovery is faltering.

Source: Bloomberg