Wall Street was set for a sharply lower open on Thursday on growing fears recent share declines triggered by euro-zone turmoil in the handling of the sovereign debt crises could lead to a wider correction.
The recent slide has dragged the S&P 500 index 8.4 percent lower from its 2010 closing high on April 23 and pushed the benchmark index into negative territory for the year on Wednesday.
May individual equity options and some options on stock indexes stop trading at Friday's close and expire on Saturday, which may increase volatility.
The euro briefly fell one percent against the dollar to hit the day's lows, tracking stocks lower as concerns grew about policy disarray in the euro zone.
A German ban on some forms of short-selling of stocks, bonds and derivatives on Wednesday appeared to catch its partners in the European Union off guard, and the fallout from the decision continued.
"For Germany to come in and unilaterally make a decision to affect the markets was seen as the first step toward dissolving the EU," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.
"There is a real fear factor going on here, it is unraveling every day that the currency gets hit," added Pado.
S&P futures sharply extended losses after breaking below the 200-day moving average of around 1100, a key support level.
S&P 500 futures fell 21.4 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 dropped 152 points, and Nasdaq 100 futures lost 32.75 points.
Staples Inc (SPLS.O) shed 1.8 percent to $21.15 after the top U.S. office products retailer gave a lackluster outlook for the rest of its fiscal year, assuming only a modest U.S. economic recovery.
Sears Holdings Corp's (SHLD.O) first-quarter profit slipped 38 percent, hit by weaker margins and slightly higher costs.
Labor Department data on Thursday showed the number of U.S. workers filing new applications for unemployment benefits unexpectedly rose last week for the first time since early April, increasing by 25,000 to a seasonally adjusted 471,000 versus market expectations of 440,000.
Data expected later Thursday includes the Conference Board's report on April leading economic indicators and the Philadelphia Federal Reserve's May gauge of manufacturing activity in the U.S. mid-Atlantic region at 10 a.m.
Analysts surveyed by Thomson Reuters expect a 0.2 percent increase in leading indicators and a rise to 22 in the Philadelphia Fed index.
