NEW YORK, Sept 22 - U.S. stocks are set to open sharply lower on Monday, dragged down by a big fall in the dollar, which sparked steep declines in overseas equities markets. Stock markets in Europe and Japan fell sharply on fears the soft dollar would hurt the competitiveness of their exports in international markets. Export-dependent companies like automakers and technology firms led decliners in both regions. In Europe, the FTSE Eurotop 300 index <.FTEU3> gave up 1.9 percent, while the DJ Euro Stoxx 50 index <.STOXX50E> slumped 2.2 percent. Overnight in Tokyo, Japan's Nikkei average <.N225> dropped 463.32 points, or 4.24 percent, to 10,475.10, its biggest fall since Sept. 17, 2001.
Standard & Poor's 500 stock index futures for December were down 8.30 points, while Nasdaq futures for the same month were down 19.50 points. Dow futures were down 71 points. The dollar fell after a weekend meeting of the Group of Seven industrial nations, which called for more exchange rate flexibility. "The stock market is selling off because of the effect of the talks at the G-7 meeting over the weekend," said Phil Flynn, vice president and senior market analyst at Alaron Trading Corp. "It appears that the G7 finance officials are proposing that the world has flexible currency rates and this will pressure Japan and China to change their policies regarding their currencies."
A closing statement from the G7 finance ministers of the United States, Britain, Canada, France, Germany, Italy and Japan said a flexible currency rate "is desirable for major countries or economic areas" in order to let markets smooth out economic ups-and-downs. The statement was seen as a victory for the United States, which has criticized Japan and China for a policy of keeping their currencies artificially weak against the dollar to protect exports. The policy puts U.S. goods and services at a disadvantage against foreign competition and hurts U.S. earnings and stock prices. The dollar fell near a 3-year low against the Japanese yen before rebounding slightly to 112.19 yen . The euro surged to $1.1463, a rise of 0.73 percent on the day. Sterling climbed to $1.6455, up 0.58 percent on the day. No economic indicators were scheduled for Monday. Among stocks in focus, AT&T Corp. , the largest U.S. long-distance telephone company, said it would buy back $1.1 billion of debt in an effort to strengthen its balance sheet.
Motorola Inc. will also be in the spotlight after the world's No. 2 cellular phone maker said late Friday its chairman and chief executive officer, Christopher Galvin, would retire. Motorola shares rose more than 8 percent in pre-market trading on Instinet.//