Wall Street stock futures dropped on Monday after American International Group and HSBC Holdings took steps to raise more capital.

Here at home, the Canadian economy shrank at an annualized rate of 3.4% in the fourth quarter, Statistics Canada said.

HSBC unveiled plans to curtail its foray into U.S. consumer lending by pulling back from key businesses. The bank, which also reported a 70% drop in profit and plans to cut its dividend, also plans to raise US$18 billion in capital by issuing new shares to existing shareholders in a rights issue.

The U.S. government announced the battered insurer AIG will receive more federal assistance of up to US$30 billion.

In earnings news, Berkshire Hathaway reported a drop in profit to US$4.99 billion in 2008 from US$13.21 billion. In his annual letter to shareholders, Warren Buffett said he couldn’t predict how stocks would perform this year.

In today’s M&A news, Bank of Nova Scotia is among three or four foreign banks interested in buying a 48% stake in Thailand’s Siam City Bank , the Thai Bank said on Monday.

In U.S. economic news, personal consumption rose 0.6% in January compared to the month before, the Commerce Department said, while personal income rose at a 0.4% rate. Personal savings as a percentage of disposable personal income was 5.0% in January, the highest level since a 5.5% rate in March 1995.

In commodities news, benchmark crude for April delivery was down US$2.12 to US$42.64 a barrel on the New York Mercantile Exchange. The contract fell 46¢ on Friday to settle at US$44.76.

Meanwhile, gold futures rose over US$5 an ounce.

Asian markets slumped, with the Nikkei 225 dropping 3.8% in Tokyo. The FTSE 100 down 2.7% in London.

On Friday, a drop in financial stocks pulled the Toronto Stock Exchange lower, but not low enough to offset gains earlier in the week.

The S&P/TSX composite index fell 63.8 points, or 0.8%, to close at 8,123.02 on Friday. For the week, the benchmark index rose 2.2%.

The junior S&P/TSX Venture composite index failed to hang on to early-day gains, dipping 1.15 points, or 0.1%, to close at 861.66.

The loonie declined by US1.2¢ to close at US78.60¢.

In New York, U.S. stock markets tumbled after the Commerce Department reported that U.S. GDP shrank by 6.2% in the last three months of 2008.

The Dow Jones industrial average fell 119.15 points, or 1.7%, to finish at 7,062.93. The blue-chip index declined 4.1% for the week and 11.7% for the month.

The S&P 500 index shed 17.74 points, or 2.4%, to 735.09, leaving it with a weekly loss of 4.5% and a monthly hit of 11%.

The Nasdaq composite index fell 13.63 points, or 1%, to finish at 1,377.84, down 4.4% for the week and 6.7% for February.

IE