Wall Street set to open lower on China, Greece worries

By Tanya Agrawal

REUTERS - U.S. stocks were set to open lower on Wednesday as Chinese markets slid further and as investors continue to keep a wary eye on developments in the Greek debt crisis.

Beijing unveiled yet another battery of measures to arrest the sell-off and the securities regulator warned of "panic sentiment" gripping investors in the world's second-largest economy.

More than 30 percent has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that China's market turmoil will destabilize the real economy is now a bigger risk than the crisis in Greece.

"It's important for investors to separate the stock market volatility and economic slowdown in China," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

"Yes, the stock market is very volatile and is causing uncertainty, but you have to remember that only about 15 percent of China's population invests in the stock market."

The growing fears of a China slowdown were reflected in the commodities markets, with copper prices falling to a six-year low earlier in the day. Oil prices, however, bounced back from a three-month low as the Iran nuclear talks failed to produce a deal.

S&P 500 e-minis were down 14.75 points, or 0.71 percent, with 388,322 contracts traded at 8:38 a.m. ET. Nasdaq 100 e-minis were down 30.75 points, or 0.7 percent, on volume of 57,791 contracts, while Dow e-minis were down 130 points, or 0.74 percent, with 52,367 contracts changing hands.

Beijing authorities could "let the unwind run its natural course and deal with the fallout, or manipulate the market," said Nick Lawson, a managing director at Deutsche Bank in London. "But (they) run the risk that this will entail so many impediments to free trade that index providers and foreign investors will be discouraged from entering the market for a long time."

U.S.-listed shares of Chinese companies took a beating, with Alibaba falling 2.93 percent in premarket trading. Baidu fell 3.1 percent, JD.com 5.2 percent, Weibo 4.4 percent and Cheetah Mobile 6.3 percent.

Euro zone members have asked Greece to come up with new reform proposals, which they will be discussed at a special EU summit on Sunday.

With its banks closed, cash withdrawals rationed and the economy in free fall, Greece has never been closer to a total state bankruptcy that would probably force it to print an alternative currency and leave the euro.

Investors will also scrutinize the minutes from the U.S. Federal Reserve's June 16-17 meeting to see if the storm clouds over Greece and China will have any effect on the timing and pace of an interest rate increase. The minutes are due at 2:00 p.m. ET (1800 GMT).

San Francisco Fed President John Williams is scheduled to speak on the economic outlook before the International Conference of Commercial Bank Economists later in the day.

The U.S. quarterly earnings season kicks off, with Alcoa reporting results after the close of markets. Corporate profits are expected to have fallen 3.1 percent in the second quarter, according to Thomson Reuters data.

Microsoft shares fell 0.63 percent to $44.02 in premarket trading after the New York Times reported the company plans to announce a new round of layoffs to cut costs further.

Harley-Davidson fell 2.15 percent to $55.44 after RBC downgraded the stock to "sector perform" from "outperform".

(Editing by Savio D'Souza)