NEW YORK (CNN/Money) - Continued war worries, along with economic reports that came on the soft side of expectations, had stocks cued for a run into the red heading into the open on Thursday.

Stock index futures pointed to a lower open, leaving open the threat that the market could break below its recent lows.

"We've got some risk here," said Todd Clark, managing director at Wells Fargo Securities.

For details of Wednesday's action, click above

The Labor Department's initial report on fourth-quarter productivity was a cloud over the markets. Productivity showed a 0.2 percent contraction, compared with a 5.1 percent increase in the third quarter. Economists surveyed by Briefing.com had expected a 0.7 percent gain.

Also weighing: weekly jobless claims slipped to 391,000 for the week ended Feb. 1, from a revised 402,000. Economists had forecast a decline to 390,000.

Investors were also reflecting on the aftermath of Secretary of State Colin Powell's address Wednesday to the U.N. Security Council. Powell presented what the United States believes is evidence that Iraq has deceived weapons inspectors, but nations skeptical about the U.S. claims do not appear to have been swayed.

U.S. markets initially rose after Powell's comments, but retreated once it seemed as though he hadn't convinced critics. The Nasdaq composite index closed Wednesday down 0.4 percent to 1,301.50, its lowest point in three months. The Dow Jones industrial average finished just below the 8,000 mark after a 0.4 percent decline.

January sales reports from the nation's largest retailers were in focus. The biggest of them all, Wal-Mart Stores (WMT: Research, Estimates), posted a same-store gain of 2.3 percent, on the low end of the range of between 2 and 4 percent. The company also said that earnings per share for the year ended Jan. 31 would be about $1.80, 2 cents better than what analysts are expecting.

Among U.S. stocks trading in Europe, Wal-Mart shares edged higher early Thursday.

In other corporate news, telecoms were primed to gain when trading gets underway. Shares of Ericsson (ERICY: Research, Estimates) gained 11 percent in pre-market trading in Europe after the firm named a new CEO and president.

Asian-Pacific stocks finished lower Thursday as jitters about Iraq and North Korea, whose nuclear rhetoric has escalated in recent days, plagued the markets

In a surprise move, the Bank of England cut its securities-repurchase rate -- the U.K. equivalent of the fed funds target rate -- to 3.75 percent from 4 percent. In explaining the move, the bank's policy-making committee cited expectations that the global economy will be "somewhat weaker than previously anticipated."

Economists had nearly unanimously expected the bank to stand pat. The cut was the first since fall 2001 and brings U.K. rates down to their lowest level since 1955. The European Central Bank, which also met Thursday, held rates steady, as expected.

U.K. stocks -- lower ahead of the rate decision -- hopped higher on the news, but were unable to clear the flatline as other European markets continued to falter.

"Like most people I was surprised, but it hasn't had much of an effect on the market," said David Smith, managing director of Cantor Fitzgerald's London office.

Powell's presentation was the topic of the day across Europe, and Smith said that it had prompted a change in view.

"The tabloid press here were coming out in favor of Mr. Powell," he said. "That's a change in view. And they're the papers that form public opinion in this country."

Papers in Germany and France, however, did not suggest a change in those countries' resolve to give U.N. inspectors considerably more time in an attempt to avoid war. But they did suggest that Europe has come to view war as inevitable.

"If the meeting proved one thing, it was the determination of the United States to finally eliminate the problem of Saddam Hussein," wrote Germany's Der Spiegel.

Treasury prices gained in early trading, sending the 10-year note yield down to 3.96 percent from 4.01 percent late Wednesday.

The dollar was somewhat softer against the yen and the euro.

Brent oil futures picked up 37 cents to $31.47 a barrel in London. Gold continued its skid, falling more than $13 to $371 an ounce.