Stock index futures fell sharply on Monday as political brinkmanship in Washington over the U.S. debt ceiling sparked fears of a U.S. rating downgrade, sending world equities lower and pushing gold to a record high.

* A divided U.S. Congress pursued rival budget plans that appeared unlikely to win broad support, pushing the country closer to a debt default.

* Analysts still expect a deal to raise the U.S. debt ceiling by August 2. But the impasse pushed the United States one step closer to losing its coveted triple-A credit rating as Democrats and Republicans seemed unlikely to agree on a deal.

* White House Chief of Staff Bill Daley warned there would be a few stressful days ahead for financial markets. But Treasury Secretary Timothy Geithner was confident a deal would be reached.

* The political wrangling has weighed on equity markets, but that has been somewhat offset by positive earnings news. Major indexes notched solid gains last week, with the S&P 500 and Nasdaq rising more than 2 percent.

* S&P 500 futures fell 9.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures slid 87 points and Nasdaq 100 futures lost 13 points.

* European shares lost ground in early trade, threatening a one-week rally, as banking stocks dropped. U.S.-listed shares of Barclays fell 3.2 percent to $15.10 in premarket trade.

* Gold surged to a record high above $1,620 an ounce in Asian trading, the fifth record high for bullion in less than two weeks.

* Also rattling investors, credit rating agency Moody's cut Greece's sovereign debt by three notches on Monday to 'Ca', just one level above default. Greece has the lowest rating of any country in the world covered by Moody's.

* Kimberly-Clark Corp reported results early Monday.

* Investors also awaited earnings from Texas Instruments Inc and Anadarko Petroleum Corp .

* On Friday, promising chipmaker earnings and optimism about a debt deal triggered a move into growth-oriented shares such as techs.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)

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