NEW YORK (Reuters) –

Stocks headed for a flat open on

Friday after home finance company Fannie Mae (FNM.N) posted a

fourth straight quarterly loss and slashed its dividend,

tempering optimism spurred by a further slide in oil prices.

The drop in oil prices buoyed hopes that inflation will

ease, stimulating spending by businesses and consumers, which

would restore corporate profit growth.

But Fannie Mae, the largest U.S. home finance company,

highlighted the impact of the housing slump. To preserve

capital Fannie slashed its dividend just three weeks after

Washington took sweeping steps to shore up Fannie and its

smaller rival, Freddie Mac (FRE.N).

While investors may find energy-sensitive stocks like

airlines and big manufacturers attractive, Fannie looked set to

cast gloom over the embattled financial services sector. Fannie

Mae shares declined 13.6 percent to $8.60 before the bell,

while those of Freddie fell 6 percent to $5.50.

“The financial crisis isn’t over,” said Paul Mendelsohn,

chief investment strategist at Windham Financial Services in

Charlotte, Vermont. The credit “side of the market still has

long ways to go if we work under the theory that the minimum of

liabilities here are going to be $1 trillion and could be as

high as $2 trillion.”

S&P 500 futures slipped 1.3 points but were above fair

value, a formula that evaluates pricing by taking into account

interest rates, dividends and time to expiration on the

contract. Dow Jones industrial average futures were off 9

points but Nasdaq 100 gained 2 points.

The dollar notched broad gains, pressuring global commodity

prices and sending U.S. crude oil futures down $2.56 to $117.45

a barrel, about $30 below its July record high.

MBIA Inc (MBI.N) was likely to be a bright spot among

financials after the world’s largest bond insurer posted

quarterly results that beat Wall Street’s forecasts. The stock

was up 10.2 percent at $9.13.

(Editing by Kenneth Barry)