April 6 (Bloomberg) -- U.S. stock futures fell as analyst Mike Mayo said loan losses will exceed levels in the Great Depression and concern grew that International Business Machines Corp.’s talks to buy Sun Microsystems Inc. have collapsed.

U.S. Bancorp and SunTrust Banks Inc. slid more than 4.4 percent after Calyon Securities’ Mayo said new government actions to shore up the financial system may not help as much as expected. Sun Microsystems sank 22 percent as people familiar with the matter said negotiations with IBM have fallen apart. European equities and crude oil erased gains.

“Concern about the condition of the financial system will be here for a while, at least for the rest of the year,” said Stanley Nabi, vice chairman of Silvercrest Asset Management Group, which oversees $8 billion in New York. “It will take a while to put the pieces together.”

Futures on the S&P 500 expiring in June retreated 1.1 percent to 831.8 as of 8:32 a.m. in New York. Dow Jones Industrial Average futures slipped 0.9 percent to 7,910 and Nasdaq-100 Index futures decreased 1.3 percent to 1,299.25.

Futures rose earlier on speculation that efforts by global governments to boost the economy will succeed. U.S. stocks capped the fourth straight week of gains April 3 after the economy showed signs of improvement and Group of 20 world leaders agreed on measures to halt the recession. The S&P 500 Index extended its rebound from a 12-year low to 25 percent.

Europe’s Dow Jones Stoxx 600 Index declined 0.4 percent, erasing a 1.9 percent advance, after Morgan Stanley cut the region’s stocks to “underweight” from “neutral.” The MSCI Asia Pacific Index climbed 0.4 percent.

‘Rolling Recession’

U.S. Bancorp lost 4.2 percent to $15.30 and SunTrust slid 4.1 percent to $13.25.

Mayo gave “sell” ratings to the two companies as well as BB&T Corp., Fifth Third Bancorp and KeyCorp, while “underperform” ratings were assigned to Bank of America Corp., Citigroup Inc., Comerica Inc., JPMorgan Chase & Co., PNC Financial Services Group Inc. and Wells Fargo & Co. the Great Depression.

“While certain mortgage problems are farther along, other areas are likely to accelerate, reflecting a rolling recession by asset class,” Mayo wrote in a report today. “New government actions might not help as much as expected, especially given that loans have been marked down to only 98 cents on the dollar, on average.”

Sun slid $1.83 to $6.66. Sun’s board, headed by co-founder Scott McNealy, informed IBM on April 4 it was breaking off exclusive negotiations, according to the person.

Offer Rejected

Sun, the developer of the Java programming language, rejected an offer of about $9.40 a share as too low, said the person, who declined to be identified because the talks are private. IBM, the world’s largest computer-services provider, slipped 1.1 percent to $101.08.

Edward Barbini, a representative for IBM, declined to comment and Sun spokesman Shawn Dainas didn’t return an e-mail seeking comment.

Campbell Soup Co. slipped 0.5 percent to $27.29 after the biggest soupmaker had its recommendation cut to “neutral” from “overweight” at JPMorgan.

Cisco Systems Inc. fell 2.3 percent to $17.75 as the largest maker of networking equipment was cut to “neutral” from “conviction buy” at Goldman Sachs Group Inc., saying “we view our growth expectation as largely priced in.”

Cisco is ready to pick up the pace of mergers and acquisitions over the next year after the valuations of technology companies slumped, said Ned Hooper, senior vice president of corporate business development.

Four-Week Rebound

The four-week rebound in stocks was spurred by Citigroup, Bank of America and JPMorgan Chase & Co., which said they made money in January and February, and Treasury Secretary Timothy Geithner’s plans to finance as much as $1 trillion in purchases of distressed assets from financial firms.

Earnings at companies such as Alcoa Inc., which will kick off the first-quarter reporting season tomorrow, and Dow Chemical Co. may show the first signs of recovery in the second quarter after profits at S&P 500 Index members fell 37 percent in the first three months of 2009, according to estimates compiled by Bloomberg.

In 11 recessions since 1938, U.S. stocks have rebounded an average of five months before a recovery in earnings, according to data compiled by Bloomberg. The economy has contracted for 16 months, equaling the two longest slumps -- between 1973-1975 and 1981-1982 -- since the Great Depression.

American companies will end more than two years of declining income by the fourth quarter, according to analyst forecasts compiled by Bloomberg. Banks will be responsible for all of the 76 percent rebound in the final three months of the year, because without financial companies, the gain turns into a 4.5 percent decline, the data show.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

Last Updated: April 6, 2009 08:33 EDT