Daniel Gross

Morning Reading: Fear Persists

What to watch, courtesy o f Yahoo! Finance's Elizabeth Trotta:

World stocks are mixed and U.S. futures are pointing to a flat to slightly lower open as investors weigh Greece default fears and the possibility of China rescuing Italy.

* An Italian government official said yesterday that the struggling nation has held talks in the past few weeks with Chinese counterparts about potential investments in the country.

* President Obama proposed limiting the amount of interest from municipal bonds that top earners can exclude from their taxable income. The move could hurt demand for state and local-government securities, Bloomberg reports.

Economic Data:

8:30 a.m. Export and Import Prices - August (0.3% and 0.2%, respectively)

2 p.m. Treasury Budget  - August (Prior: -$90.5B)

Early headlines:

Greece weighs on markets despite China-Italy talks

Greece, Europe struggle to contain debt crisis

Merkel warns on Greece, Obama voices U.S. alarm

China Called On as Lender Amid Italy Crisis

US working-age losing ground amid unemployment

Obama Moots Limits on Tax Breaks for Muni Bonds

HP extends $11.2 billion Autonomy offer

BNP Paribas denies it can't get dollar funding

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