Futures sharply lower

LONDON (CNNMoney.com) -- U.S. stock futures turned sharply lower early Thursday, following a slump in world markets, as investors mulled the future of Wall Street reform legislation after it failed a key vote in the Senate.

At 8:45 a.m. ET, Dow Jones industrial average (INDU), futures were about 1.5% lower. Nasdaq (COMP) and S&P 500 (SPX) futures were down about 2%.

Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

U.S. stocks ended Wednesday mildly lower after paring losses. The Dow declined 0.6%, the S&P 500 fell 0.5% and the Nasdaq tumbled 0.8%.

Wall Street reform: An expansive bill to overhaul U.S. financial rules failed a key test vote in the Senate late Wednesday.

The bill aims to stop bailouts, de-complicate financial products and strengthen consumer protection. The vote was 57 to 42. Under Senate rules, Democrats needed 60 votes to move ahead to a final vote.

Economy: A report on weekly jobless claims showed the number of people filing for first-time unemployment benefits rose unexpectedly by 25,000 to 471,000 last week. Economists expected a drop to 440,000 claims.

Futures drifted further down after the report was released.

Also after trading begins, the Conference Board will release its index of leading economic indicators. The index is expected to have risen 0.2% in April after rising 1.4% in March.

The Philadelphia Fed index, a regional manufacturing survey, for May is predicted to have risen to 21.3 in May from 20.2 in April.

After trading ends Thursday, Dell (DELL, Fortune 500) will report quarterly earnings results.

World markets: European shares extended the previous session's sharp drop. In morning trading, the FTSE 100 was down 2.8%, France's CAC 40 fell 2.9% and Germany's DAX lost 2.7%.

Asian markets ended the day in negative territory. Japan's benchmark Nikkei tumbled 1.5%, the Shanghai Composite fell 1.2% and the Hang Seng dropped 0.2%.

Dollar and commodities: The euro continued its slump after hitting a four-year low earlier in the week. Against the shared currency, the dollar rose 0.6%. The greenback was up 1.1% on the British pound, but it fell 0.9% versus the Japanese yen.

U.S. light crude oil fell $1.52 to $68.35 a barrel. COMEX gold for June delivery was down $11.90 to $1,181.20 per ounce.

Bonds: Treasury prices were higher early Thursday, pushing the benchmark 10-year note's yield down to 3.33%. Bond prices and yields move in opposite directions.