Indications: U.S. stock futures hit by Europe

NEW YORK (MarketWatch) � U.S. stock futures fell sharply Monday as political uncertainty in Europe cast doubt on the region�s ability to combat its debt troubles and cereal-maker Kellogg Co. cut is 2012 outlook.

Citing weaker first-quarter sales growth in Europe and for certain U.S. products, Kellogg K � said it now anticipates full-year profit between $3.18 and $3.30 a share. Analysts surveyed by FactSet expected 2012 earnings of $3.48 a share. Shares of Kellogg fell 5% in pre-open trading.

Wal-Mart Stores Inc. WMT � shares were hit in pre-open trade after the New York Times during the weekend reported allegations that top executives at its Mexican subsidiary waged a large bribery campaign.

Futures for the Dow Jones Industrial Average �fell 125 points, or 1%, to 12,863.

S&P 500 Index futures �dropped 13.20 points, or 1%, to 1,362, while Nasdaq 100 futures �fell 21 points, or 0.8% to 2,653.25.

The Stoxx Europe 600 index XX:SXXP �tumbled 2.1% to 252.4, with peripheral markets particularly hard hit and yields for a range of 10-year government bonds, outside of Germany�s, rising.

Elections and politics

The first round of France�s presidential election on Sunday saw President Nicolas Sarkozy come in second to Socialist challenger Francois Hollande in a field of 10 candidates, forcing a runoff between the pair on May 6.

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�The risk was always that the European crisis and associated weak economic activity would encourage more extreme politics. This is slowly happening and is something we need to watch going forward,� said Jim Reid, strategist at Deutsche Bank, in a note.

Also casting a shadow was news the Netherlands will face an early general election after budget talks aimed at trying to meet European Union rules and keep its triple-A credit rating fell apart on Saturday.

The right-wing Freedom Party reportedly walked out of three-party talks, saying EU budget demands were impossible to meet. Dutch Prime Minister Mark Rutte has reportedly resigned.

Data out of Europe showed business activity across the euro zone contracted at a faster-than-expected clip in April, according to data firm Markit.

From China, news that manufacturing activity continued to contract in April, though at a smaller pace, pulling down the Hang Seng Index HK:HSI HK:HSI

U.S. stock markets finished higher Friday, with the Dow Jones Industrial Average DJIA �and the S&P 500 indexes SPX �both breaking two-week losing streaks. The DJIA gained 65.16 points, or 0.5%, to 13,029.26, and was up 1.4% on a weekly basis.

A busy earnings week kicks off in earnest Tuesday with results from Apple Inc. AAPL �among others.

Within deal news on Monday, shares of San Diego-based biotechnology group Ardea Biosciences Inc. �surged 51% in pre-open trading after AstraZeneca PLC AZN �UK:AZN �agreed to buy the company for $32 a share, or $1.26 billion. Ardea shares closed Friday up 2.6% at $20.84, so the deal price is a premium of 54%.

Shares of Amylin Pharmaceuticals Inc. AMLN �rose 12% in pre-open. The group has reportedly hired two investment banks to help it find a buyer after it rejected a bid from Bristol-Myers Squibb Co. BMY , Bloomberg News reported on Monday.

In other markets, crude-oil futures for June delivery �fell $1.38, or 1.4%, to $102.39 a barrel.

Gold for June delivery �tumbled $15.70, or 1%, to $1,627.10 an ounce. Silver futures for May delivery �slid 86 cents, or 2.7%, to $30.80 an ounce.

The dollar rose across most currencies in light of political pressures across the euro zone. The ICE dollar index DXY �rose to 79.522, up from 79.140 reached in late North American trading Friday.