Major US indexes opened down as the market waits for the US government to announce as early as today the number of banks that will be allowed to repay their Troubled Asset Relief Program (Tarp).
The Washington Post said the size of the repayments may be twice the initial estimate of $25bn. Several analysts believe that it will be an "obstacle" to the road to economic recovery. Marc Pado, US market strategist at Cantor Fitzgerald in San Francisco, said: "Overall I don't think it (banks repaying bailout funds) is a real plus for the market or for the economy.
"They are choosing to repay TARP rather than rebuild their business. In terms of the economic recovery it's an obstacle."
The Dow Jones Industrial Average fell 60.99 points or 0.70% to 8,702.14, the S&P 500 declined 8.90, or 0.95%, to 931.60 and the Nasdaq dropped 0.70% to stand at 1,836.76.
The indexes were also down after fast food chain McDonald's issued a profit warning. Shares in McDonalds' fell 3% after it warned that second quarter profit could be reduced by 8 cents to 9 cents a share if foreign exchange rates remained at current levels.
European shares are weaker but off the day's lows after the start of trading on Wall Street, where shares suffer on worries about rising bond yields.
The FTSEurofirst 300 index of top European shares is down 1.1% at 862.33 points, up from the day's low of 857.39.
