Stocks poised for a soft open

NEW YORK (CNNMoney) -- U.S. stocks were set to open toward the down side Tuesday after China's central bank raised key rates for the third time since October.

Dow Jones industrial average (INDU) futures slipped modestly, while S&P 500 (SPX) and Nasdaq (COMP) futures were flat. Futures measure current index values against perceived future performance.

The People's Bank of China announced Tuesday that it would raise bank's borrowing and lending rates by a quarter percentage point. The rate change will go into effect Wednesday. The move comes as Chinese policymakers look to gradually cool the nation's robust economy, and avoid a hard landing.

Stocks in Europe turned mixed, and oil prices fell after the announcement.

Anthony Conroy, head trader at BNY ConvergEx Group, said the move raised concerns in the market that a slowdown in China's economy could have a ripple effect.

"They've been such a big consumer of metals, mining, autos and other things," he said of China. "Any major slowdown there could definitely affect our economy."

In addition, after several days of gains "the market is getting close to the profit-taking level," he added.

Investors started the week in high spirits Monday, as several major mergers pushed the Dow Jones industrial average (INDU) up 69 points, or 0.6%.

The deals of the day included AOL's (AOL) acquisition of news blog The Huffington Post for $315 million, and a merger between oil drillers Ensco (ESV) and Pride International (PDE).

Companies: Toyota issued an upbeat financial forecast with three months left in the fiscal year, but the automaker said sales were sluggish in the third quarter.

Toyota (TM) said net income fell to $1.1 billion from $1.87 billion, a 38.9% drop compared to the third quarter of last year.

Later Tuesday, the U.S. government is expected to announce the results of a 10-month inquiry into possible causes of unintended acceleration in Toyota cars and trucks.

Shares of Avon (AVP, Fortune 500) fell 3% in premarket trading after the beauty products company said fourth-quarter earnings fell to 50 cents per share from 62 cents a year earlier.

Shares of Akamai Technologies (AKAM) and Urban Outfitters (URBN) were higher following analyst upgrades.

World markets: European stocks were mixed in morning trading. Britain's FTSE 100 slid 0.2% and France's CAC 40 edged down 0.1%, while the DAX in Germany ticked up 0.1%.

Asian markets ended the session mixed. Japan's Nikkei rose 0.4%, while the Heng Seng in Hong Kong fell 0.3%. The Shanghai market is closed for holiday.

Currencies and commodities: The dollar fell against the euro and the Japanese yen, but gained versus the British pound.

Oil for March delivery fell $1.37 to $86.10 a barrel.

Gold futures for April delivery rose $3 to $1,351.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged higher, pushing the yield down to 3.64% from 3.65% late Friday.