(By Salman - iStockAnalyst Writer)U.S. index futures fell after Lehman Brothers Holdings Inc. (LEH) reported a $3.9 billion loss in the third quarter and cut its dividend.

At 13:14 PM London Time, DJ Stoxx 600 was down 3.58 (-1.28%) at 276.02.

Lehman Brothers on Wednesday reported a $3.9 billion loss for the third quarter, said it would spin off the "vast majority" of its commercial real estate assets into a new company, and said it plans to sell a majority of its investment management division. Its annual dividend will be slashed to 5 cents a share from 68 cents, which will save Lehman $450 million per year. Earlier, the Korea Development Bank issued its own statement on Wednesday saying talks collapsed over price and the broader market.

The fourth-largest U.S. securities firm has been trying to raise capital and shed devalued real-estate assets that saddled the company with $8.2 billion in writedowns and credit losses in the past year.

Lehman shares lost 3.1 percent to $7.55 in pre-market trading in New York.

Other financial stocks also took the beating. Washington Mutual Inc. (WM) and Merrill Lynch & Co. (MER) dropped as much as 7 percent.

FedEx (FDX) gave an updated forecast, as the hard-hit parcel service lifted its fiscal first-quarter earnings view to $1.23 from a previous estimate of 80 cents to $1 a share, citing the recent drop in oil prices. FedEx shares rose 3.9% in pre-market trade.

Texas Instruments (TXN) will be in the spotlight as the computer chip maker said it expects third-quarter sales of $3.33 billion to $3.47 billion, compared with its previous range of $3.26 billion to $3.54 billion. The company also said it foresees earnings of 42 cents to 46 cents a share. It had expected 41 cents to 47 cents a share.

The Dow Chemical Co. (DOW) said it may divest its Clear Lake Operations in Pasadena, Texas, to mitigate antitrust resistance in connection with its proposed acquisition of Rohm & Haas Co.

European Stocks also lost ground on Wednesday. At 13:14 London time, UK FTSE was down 1.30% at 5,345.10. German DAX was down 0.99% at 6171.99 while French lost 0.96% at 4252.15.

The European Commission slashed its prediction for gross domestic product growth for the 15 nations using the euro to 1.3 percent from the 1.7 percent predicted in April.

Asian Stocks too finished in red. The Nikkei average fell 0.4 percent on Wednesday.

Crude oil which earlier rose after OPEC urged its members to comply with output quota, later retreated into red. Dollar was trading flat before opening well.

Ike remains a Category 1 hurricane on the Saffir-Simpson sale in the Gulf of Mexico near Cuba, but it could become a major hurricane as it moves into the central Gulf of Mexico, the National Hurricane Center said in its 8 a.m. ET update.