NEW YORK, July 30 (Reuters) - U.S. stock index futures pointed to a weaker start for the market in choppy trading on Monday after heavy losses last week on fear that a credit crunch would slow or stop the pace of takeovers that have boosted stocks.
In the latest sign of problems in the home lending market, American Home Mortgage Investment Corp. said its banks were demanding that it put up more cash after the mortgage lender was forced to write down the value of its mortgage and security portfolios. The shares fell 25 percent before the opening bell.
U.S. equities suffered their worst week in nearly five years last week on concern that tightening lending standards could hurt corporate buy-outs and stock buybacks that have fueled a spring rally in equities.
"It will take some time for the concern about credit that was going around the market last week to play out," said Michael Malone, a trading analyst at Cowen & Co. in New York. "There isn't any one indicator to suggest it is behind us."
European stocks fell for a fifth day in a row, led lower by financial shares. The FTSEurofirst 300 index of leading European shares slipped 0.3 percent.
On Wall Street, the Dow industrials lost 4.2 percent last week, the S&P dropped 4.9 percent and the Nasdaq declined 4.7 percent.
S&P 500 futures were off 0.60 point, well below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.
Dow Jones industrial average futures were up 8 points, and Nasdaq 100 futures were up 0.50 point. In another sign of tightening liquidity, China's central bank on Monday lifted its reserve requirement for banks for the ninth time in 13 months. For details, see [ID:nPEK297838].
The diminishing appetite for riskier assets fueled buying of U.S. Treasuries, which sent yields on benchmark 10-year notes to 4.75 percent. Yields fell to two-month lows on Friday as investors sold riskier assets for safe-haven government debt.
There were no major economic indicators set for release on Monday.
Shares of American Home Mortgage fell to $7.79 on Monday after closing at $10.47 on Friday on the New York Stock Exchange. The company said late on Friday it had written down the value of its loan and security portfolios significantly, which prompted margin calls on its credit facilities. [ID:nN29340267].
HSBC Holdings , which had blamed bad U.S. mortgage loans for its first ever profit warning earlier this year, said on Monday first-half profit rose 13 percent, but Europe's biggest bank also reported a sharp rise in bad loans. Its shares rose 2 percent in London.
On Friday the Dow Jones industrial average <.DJI> lost 208.10 points, or 1.54 percent. The Standard & Poor's 500 Index <.SPX> fell 23.71 points, or 1.60 percent and the Nasdaq Composite Index <.IXIC> slid 37.10 points, or 1.43 percent. ((Reporting by Jennifer Coogan
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