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Stocks set to fall as protests in Libya intensify

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NEW YORK (AP) -- Stocks are headed for a sharply lower opening today as investors become increasingly worried about violent protests in Libya.

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Oil prices rose 7 percent to $96 a barrel after the uprising threatened the country's oil production. Libya is the world's 18th largest oil producer, accounting for 2 percent of global daily output. It also sits atop the largest oil reserves in Africa.

At least 250 people have been killed in Libya so far, according to the U.N. Office of the High Commissioner for Human Rights. Key government officials have resigned and air force pilots have defected following a crackdown on protests in Tripoli, Libya's capital.

Many traders are worried that the unrest will spread to other oil-rich countries in the region, or lead to higher gas prices for consumers.

"The mushrooming of tension and unrest in the Middle East has renewed investor's concerns about the price of oil," said Alan Gayle, senior investment strategist for RidgeWorth Investments. "This puts a damper on consumer optimism, which is really critical at this stage of the recovery."

Ahead of the opening bell, Dow Jones industrial average futures are down 70 points, or 0.6 percent, at 12,305.

Standard & Poor's 500 index futures are down 15, or 1.2 percent, at 1,327. Nasdaq 100 index futures are down 34, or 1.4 percent, at 2,361.

Bond prices are rising, pushing yields lower. The yield on the 10-year Treasury note fell to 3.54 percent from 3.59 percent late Friday. Bond markets were closed Monday for the President's Day holiday.

In earnings news, Home Depot Inc. rose 4 percent in pre-market trading after the company's net income rose 72 percent in the fourth quarter as more people started on home-improvement projects. The retailer also raised its earnings forecast for 2011.

Wal-Mart Stores Inc. fell 2 percent ahead of the opening after revenue at stores open at least a year fell for the seventh straight quarter. That raised worries about the company's ability to turn around its U.S. business this year.

Refinery operators Holly Corp. and Frontier Oil Corp. also said they would merge in an all-stock deal valued at nearly $3 billion. Holly's stock fell 1.5 percent in premarket trading, while Frontier's fell 3 percent.

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