Wall Street futures activity suggested that stocks could open sharply lower on Tuesday amid continued unease about the swine-flu outbreak.

Investors are concerned that the swine-flu outbreak is escalating after the World Health Organization said it is too late to contain the virus. The WHO raised its alert to a phase 4, saying the flu spreads easily but is not pandemic.

The outbreak took a toll on Asia and Europe travel stocks for a second straight session. Japan’s Nikkei stock average fell 2.7%, while Hong Kong’s Hang Seng ended 1.9% lower.

Major European indexes were weaker in recent trading. The UK’s FTSE 100 fell 2.1%, Germany’s DAX index fell 2.6% and France’s CAC-40 fell 2.4%.

In commodities news, oil prices fell Tuesday with the June contract on the New York Mercantile Exchange down US$1.39 at US$48.75 a barrel.

In U.S. banking news, the Wall Street Journal reported Tuesday that Bank of America and Citigroup have been told to raise more capital based on early results of the government’s stress test.

Regulators briefed officials at the 19 biggest U.S. banks on Friday about the “stress tests” they conducted on them, but are not planning to release the results publicly until May 4.

In today’s economic news, the U.S. Federal Reserve will begin a two-day meeting on interest rates on Tuesday. Investors will be watching for the central bank’s new assessment of the economy.

Here at home, the Canadian dollar opened at US81.67¢, down 0.33 of a cent from Monday’s close.

The benchmark index of the Toronto Stock Exchange remained firmly lower throughout Monday’s trading session, as investors showed concern over the recent spread of swine flu.

The S&P/TSX composite index dropped 154.68 points, or 1.6%, to close at 9,394.8 on broad-based declines.

Meanwhile, the the junior S&P/TSX Venture composite index dipped 3.83 points, or 0.4%, to close at 1,002.98.

In New York, U.S. stocks also retreated on Monday on concerns over the recent spread of swine flu.

The Dow Jones industrial average fell 51.29 points, or 0.6%, to finish at 8,025.00. It was the Dow’s first drop in three sessions.

The S&P 500 index dropped 8.72 points, or 1%, to 857.51.

The Nasdaq composite index shed 14.88 points, or 0.9%, to stand at 1,679.41.

Shares of General Motors Corp. surged more than 20% on the New York Stock Exchange after it announced a restructuring plan, elevating hopes that the automaker will be able to avoid bankruptcy. GM shares added US$0.35 to close at US$2.04.

IE