U.S. stocks headed for weaker start; focus on ISM

FRANKFURT, Jan 2 (Reuters) - U.S. stocks looked set to open lower on Wednesday, with the focus on economic data for clues about the outlook for growth and the Federal Reserve's next monetary policy move.

"Worries about the still escalating U.S. housing crisis and its implications for the overall economy point to a subdued start to the new year," Germany's Postbank said in a daily note.

Citigroup, in a 2008 strategy outlook note dated Dec. 31, said markets were dominated by heightened risk awareness.

"More uncertainty surrounds the global economic outlook now than at any time in the past few years," Citigroup said, adding: "(U.S.) Recession or no recession? This remains the crucial macro question for 2008."

Italian bank UniCredit said U.S. economic data over the next few days, including manufacturing ISM on Wednesday at 1500 GMT, "will give a clear indication whether the Fed will cut rates by the end of the month."

Economists polled by Reuters expect a manufacturing ISM reading of 50.4, down from 50.8 for November.

The U.S. central bank's monetary policy setting Federal Open Market Committee (FOMC) holds its next meeting on interest rates Jan. 29-30.

The U.S. economy "needs continued aggressive Fed easing over the coming months to avoid a turn for the worse", Goldman Sachs said in a note.

No major U.S. companies are scheduled to report results on Wednesday.  Continued...