Dec. 27 (Bloomberg) -- U.S. equity futures fell, the dollar weakened and European stocks swung between gains and losses after a report showed American home prices were worse than estimated. Italian government bonds declined as the nation prepares to sell debt this week. Standard & Poor's 500 Index futures fell 0.3 percent to 1,256.90 at 9:02 a.m. New York time. The Dollar Index declined 0.1 percent, slumping a fourth straight day. The Stoxx Europe 600 Index dropped 0.1 percent after advancing 0.3 percent. Italian 10-year bond yields climbed five basis points to 7.03 percent. Copper futures lost 1.5 percent. House prices in 20 U.S. cities dropped 3.4 percent from a year earlier in October, compared with the median economist forecast for a 3.2 percent drop. A report later may show consumer confidence improved, according to the economist estimate. The world economy is in danger because of Europe's debt crisis, said International Monetary Fund Managing Director Christine Lagarde. Italy will sell 9 billion euros ($12 billion) of 179-day bills and as much as 2.5 billion euros of zero-coupon 2013 bonds tomorrow. "After the Christmas holidays, market participants are focused on the consumer confidence index and Case-Shiller," said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. "The unemployment data in the next days are more important for the market because it shows how strong the U.S. economy really is." The Labor Department said Dec. 22 that initial jobless claims dropped to 364,000, the lowest level since April 2008, fueling a 0.8 percent rally in the S&P 500. The same report in two days may show the figure increased to 374,000, according to the median economist estimate in a Bloomberg News survey. Recapitalization In Europe, Banco Comercial Portugues SA and Banco Espirito Santo SA, Portugal's biggest lenders, rallied more than 5.8 percent as Jornal de Negocios said the government may recapitalize the country's banks without becoming a shareholder. Germany's DAX Index climbed 0.2 percent and France's CAC 40 gained 0.2 percent. U.K. markets remain shut today for the holidays. The European equity gauge has retreated 12 percent this year, compared with a 17 percent drop in the MSCI Asia Pacific and a 0.6 percent gain on the S&P 500. The U.S. equity gauge added 0.9 percent on Dec. 23 after data last week on durable goods, jobless claims and the housing market added to signs the world's largest economy is recovering. Treasuries Treasury 10-year yields fell one basis point to 2.02 percent. German 10-year yields fell three basis point to 1.93 percent. A basis point is 0.01 percentage point. Europe has made progress in tackling the crisis but needs to speed up the implementation of measures to fight it, Lagarde said in the Journal de Dimanche on Dec. 25. The U.S. is already being affected and growth forecasts for China, Brazil and Russia are being lowered, she said, according to the report. Copper for March delivery fell as much as 3 percent to $3.365 a pound before trading at $3.434 on the Comex in New York. Futures gained 4.2 percent last week. Gold futures dropped 0.7 percent to $1,594.30 an ounce and oil advanced 0.1 percent to $99.79 a barrel on the New York Mercantile Exchange. --With assistance from Paul Dobson and Andrew Rummer in London, Yoshiaki Nohara, Monami Yui, Norie Kuboyama, Toshiro Hasegawa and Pavel Alpeyev in Tokyo, Shiyin Chen and Kristine Aquino in Singapore and Richard Dobson in Shanghai. Editor: Nick Baker To contact the reporter on this story: Rob Verdonck in London at rverdonck@bloomberg.net To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

Source