It's not easy to balance on a two-legged stool, but the heads of some big U.S. industrial companies might need to try that stunt again.

As the world economy slumped two years ago, chief executive officers consoled themselves with the thought that while demand at home was plummeting, at least their Western Europe and Asia operations were holding up better.

Now that Asia is firmly back on a growth footing and the U.S. economy is looking healthier, CEOs have a new worry -- that the Greek debt crisis will drag down other European economies, leaving them once more with just two solid markets.

CEOs said they were being careful not to presume that the effects of the crisis would be limited to Greece and its neighbors in southern Europe.

You never know where these things are going to go, said David Cote, CEO of Honeywell International Inc, the world's largest maker of cockpit electronics.

Having seen troubles in a small slice of the U.S. mortgage market spiral into the worst downturn the world economy has faced since the Great Depression of the 1930s, CEOs were wary of dismissing the risk that the troubles in Greece could spread.

You start off with the explanation about why it's contained and why it's not a big deal, and then all of a sudden you find yourself saying, 'How did I end up in the middle of this problem?' Cote said at a conference in Florida this week. That same possibility does exist for Greece and what's going on in Europe.

European Union leaders have agreed to a nearly $1 trillion rescue plan for Greece to give the nation time to deal with a deficit that represents about 14 percent of its gross domestic product.

Most major U.S. manufacturers are not worried about Greece in itself, since the Mediterranean country is not a significant export market. However, the risk that the debt crisis could spread through the rest of the EU does have many concerned that demand in the region could remain weak.

It is serious, said Eaton Corp CEO Sandy Cutler. I don't think you can see this kind of debt bomb ... without taking pause.

U.S. companies may not feel the full effect of the debt crisis for four to six months, he said.

NO BIG HOPES

Makers of short-cycle products like air conditioners and office supplies, which are ordered close to need, are likely to feel any downturn before manufacturers of bigger-ticket items like aircraft engines and automation equipment.

3M Co (MMM.N), whose products range from Post-It notes to films used in flat-panel televisions, is watching the situation in Europe because much of its business is short-cycle, Chief Financial Officer Pat Campbell said.

Still, he and several other executives said they were not yet overly concerned because few U.S. companies had been counting on strong growth in Europe this year anyway.

We thought Western Europe specifically was going to be the slowest growth region of all of our operations, and it has obviously played out that way, Campbell said.

One of the crisis' immediate effects is that a decline of the euro against the dollar would reduce the value of U.S. companies' sales on the continent. Several executives said this would be a drag on earnings this year.

The euro this week fell to a four-year low of $1.2143.

Sovereign debt fears in Europe have severely weakened the euro despite a trillion-dollar support package, said United Technologies Corp CEO Louis Chenevert. It is difficult to know how these euro woes will spread.

United Tech, the world's biggest maker of elevators and air conditioners, nonetheless is highly confident of its 2010 profit forecast, he said.

Tyco International Ltd, though, said the falling euro would weigh on its profit later this year.

Just the currency change there is going to cost us 3 cents to 5 cents (a share) in the third and fourth quarter of this year, said Ed Breen, CEO of the maker of security and fire-control gear.

In April, the company had forecast 2010 profit of $2.50 to $2.58 a share from continuing operations.

One factor that will limit the effect of the euro's slide on U.S. industrials is that many of them build at least some of the products they sell in Europe on the continent, so their costs would fall in line with their sales there.

General Electric Co CEO Jeff Immelt said the decline in the euro's value could reduce the largest U.S. conglomerate's overall revenue.

But he added: It shouldn't have a big impact on earnings or put us at a competitive disadvantage vis-a-vis other companies that are there.

(Reporting by Scott Malone; Editing by Lisa Von Ahn)

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