Stock futures off on German GDP, ahead of European talks

By Rodrigo Campos

NEW YORK (Reuters) - Stock index futures fell sharply on Tuesday after data showed sluggish German growth hobbled the euro zone, rekindling fears about a stagnant global economy.

The German economy slowed between April and June to its weakest quarterly growth rate since 2009, fueling concerns about an European economy already weakened by a fiscal crisis. German stocks (XETRA:^GDAXI - News) fell 2.6 percent.

"German GDP data is the catalyst this morning that got us off to a bad start," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"Europe slowing down is not a good sign because if you are going to be cutting spending, raising revenue ... that makes the potential problem worse."

German Chancellor Angela Merkel and French President Nicolas Sarkozy were to meet later Tuesday to discuss measures to contain Europe's fiscal crisis. A joint news conference was scheduled at noon EDT.

S&P 500 futures fell 17.3 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures lost 113 points, and Nasdaq 100 futures dropped 27.5 points.

On the earnings front, Home Depot Inc (NYSE:HD - News) reported better-than-expected quarterly profit and raised its earnings forecast for the year.

Wal-Mart Stores Inc's (NYSE:WMT - News) U.S. same-store sales fell 0.9 percent in the second quarter, marking its ninth straight quarterly decline, but profit topped estimates. Its shares rose 2.4 percent to $51.25 in premarket trading.

Dell Inc (NasdaqGS:DELL - News) was also due to report results.

Resource-related shares might come under pressure as U.S. crude oil prices fell 1.6 percent, while copper was also down 1.5 percent.

U.S. data coming later includes the Commerce Department's release of housing starts and permits for July and the Labor Department's report on import-export prices for the same month, both at 8:30 a.m. EDT.

Economists in a Reuters survey forecast an annualized rate of 600,000 housing starts versus 629,000 in June. Imports are seen falling 0.1 percent, and exports are expected to rise 0.1 percent.

The U.S. Federal Reserve releases industrial production and capacity utilization data for July at 9:15 a.m. EDT. Economists expect a 0.5 percent rise in July production and a reading of 76.9 percent for capacity utilization.

Wall Street stocks rose for a third day on Monday as investors used Google Inc's (NasdaqGS:GOOG - News) offer to buy phone maker Motorola Mobility Holdings Inc (NYSE:MMI - News) as an excuse to jump back into the market after weeks of sharp selling.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)