* U.S. consumer spending rises sharply in November
* Fed to decide on interest rate hike next week
* DuPont, Dow Chemical fall after agreeing to merge
* Futures down: Dow 156 pts, S&P 14 pts, Nasdaq 36 pts (Adds details, comment, updates shares)
By Tanya Agrawal
Dec 11 (Reuters) - U.S. stocks looked set to open sharply lower on Friday as crude oil prices plumbed levels not seen in seven years on growing oversupply concerns.
The steep drop in oil prices adds to investor uncertainty as the U.S. Federal Reserve prepares to raise interest rates for the first time since June 2006 at its meeting next week.
Adding to the somber mood, China’s yuan fell to its lowest in 4-1/2 years on concerns about the country’s slowing economy and expectations of a U.S. rate hike.
Global shares were lower amid concerns that weakness in the Chinese currency could weigh on the global economy and on companies with strong export ties to China.
“Oil is serving as a bellwether for the global economy and could be a sign of things to come,” said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.
“Today’s trading action will be tied to oil and could be erratic and choppy.”
S&P 500 e-minis were down 14 points, or 0.68 percent, with 199,069 contracts traded at 8:34 a.m. ET (1334 GMT). Nasdaq 100 e-minis were down 36 points, or 0.78 percent, on volume of 24,165 contracts. Dow e-minis were down 156 points, or 0.89 percent, with 21,155 contracts changing hands.
Investors are also keeping an eye on U.S. data, which could cement expectations that the Fed is gearing up to hike rates at its Dec. 15-16 meeting.
Fed fund futures place an 85 percent chance of a hike. A recent Reuters poll also showed that all but one of 18 brokerages that deal directly with the central bank expect a rate increase.
“The Fed has painted themselves into a corner and if they don’t raise rates then they’re basically saying the economic recovery isn’t strong enough,” Bakhos said, adding in case the Fed decided to hold off, investors will cut their exposure to equities.
A gauge of U.S. consumer spending rose solidly in November as the holiday shopping season got off to a fairly brisk start. Retail sales, excluding automobiles, gasoline, building materials and food services, rose 0.6 percent following a 0.2 percent gain in October.
Market analysts expect the University of Michigan’s preliminary consumer sentiment index for December to increase to 92.0 from 91.3 last month. The report will be released at 10 a.m. ET.
DuPont shares were down 5.4 percent at $70.57 in premarket trading after the company agreed to merge with Dow Chemical in a deal valuing the combined entity at $130 billion. Dow was down 2.8 percent at $53.36.
Jetblue Airways was down 1.5 percent at $25.05 after the airline operator said it expected flight sales as measured against capacity to fall in the fourth quarter from a year earlier.
Adobe Systems was up 4.5 percent at $93.01 after the Photoshop maker reported a profit that topped market expectations for the ninth straight quarter. (Reporting by Tanya Agrawal, Editing by Anil D‘Silva)