U.S. stock futures slide as rate fears persist

NEW YORK, June 8 (Reuters) U.S. stock index futures slumped on Thursday as investors held fast to worries about rising global interest rates despite news that al Qaeda's leader in Iraq, Abu Musab al-Zarqawi, was killed in a U.S. air strike.

U.S. futures pointed to a sharply lower open for stocks, following a pattern of worldwide selling of equities amid heightened concerns about quickening inflation after tough talk this week by central bankers, including Federal Reserve Chairman Ben Bernanke.

The European Central Bank is expected to announce it is raising interest rates later on Thursday.

In company news, National Semiconductor Corp. may be in focus as it is expected to report fourth quarter earnings.

The death of Zarqawi, who had come to symbolize the radical Islamic insurgency against U.S. occupation, was announced by Iraqi Prime Minister Nuri al-Maliki on television.

The overseas sell-off began in Asia and added to pressure on U.S.

markets. Japan's Nikkei average tumbled to its biggest one-day percentage loss in a year. European shares sank as investors were on edge before the European Central Bank's decision on interest rates, expected about 7:45 a.m. (1145 GMT).

''There continues to be worldwide anxiety over central bank actions,'' said Anthony Chan, chief economist at JPMorgan Private Client Services. ''The death of Zarqawi would normally add at least a positive bounce to the market because it lowers oil prices and reduces uncertainty, but even that is not enough to get the market excited.'' Standard&Poor's 500 futures were down 4.7 points, 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 down 32 points, and Nasdaq 100 futures were down 8.75 points.

Adding to negative sentment, shares of Finisar, fell 10 percent after the bell on Wednesday as the communications equipment firm reported quarterly results, and Xilinx, fell 2.2 percent on Inet after news it faces a shareholder lawsuit.

Tough talk on inflation from Bernanke and other U.S. central bank officials this week has fueled investor concerns that the may not be done raising interest rates Federal Reserve Bank of Atlanta President Jack Guynn said on Wednesday core inflation may have already breached an acceptable upper level and that the Fed must not let its guard down.

Investors were awaiting further clarity about what the U.S.

Federal Reserve will do at the June 28-29 monetary policy meeting as Federal Reserve Board Governor Randall Krosner was due to speak before the Bankers Association for Finance and Trade at 12:15 p.m.

(1615 GMT).

Also on the economic front, investors were waiting for the Labor Department's report on last week's first-time claims for jobless benefits for due at 8:30 a.m. (1230 GMT), and the Commerce Department's wholesale inventories and sales for April at 10 a.m.

(1400 GMT).

REUTERS CS PM1737