European shares traded flat on Monday after opening lower in the wake of grim economic data across the globe last week that prompted some investors to bet on the greater likelihood of policy action from global central banks.

Japan's shares fell sharply on Monday, with the broader Topix .TOPX index hitting a 28-year low, as investors rushed to sell riskier assets on disappointing U.S. jobs data, deepening debt woes for the euro zone and slowing Chinese growth.

Commerce Dept releases April factory orders at 10:00 a.m. EDT (1400 GMT). Economists in a Reuters survey expect a rise of 0.2 percent compared with a 1.9 percent drop in the prior month.

The bond markets are treating Morgan Stanley (MS.N) like a junk-rated company, and the investment bank's higher borrowing costs could already be putting it at a disadvantage even before an expected ratings downgrade this month.

A trial of Johnson & Johnson's (JNJ.N) Zytiga in certain prostate cancer patients showed that it doubled the amount of time they lived without the disease getting worse, potentially offering new hope for patients who see their cancer return.

An experimental Bristol-Myers Squibb (BMY.N) drug helped shrink tumors in patients with advanced melanoma, kidney and lung cancers in a preliminary trial, raising hopes for yet another drug that can wake up the immune system and train it to attack cancer cells.

American Airlines failed to agree on cost-cutting measures with its flight attendants' union, setting the stage for a judge to rule on voiding the contract for the bankrupt carrier, a subsidiary of AMR Corp (AAMRQ.PK), the union said in a statement late on Friday.

U.S. private equity firm Warburg Pincus WP.UL is set to buy a majority holding in Indian financial services firm Future Capital Holdings (FCHL.NS) for $100-$125 million, two sources with direct knowledge of the matter told Reuters on Sunday.

Ford Motor (F.N) is in talks with local partners to introduce indigenous brands in China as it plays catch-up in the world's biggest auto market with the likes of General Motors GM.N and Volkswagen (VOWG_p.DE), its China chief said on Monday.

As E3 gets going in Los Angeles, Microsoft (MSFT.O) is expected to announce new features and media partnerships for the Xbox and its motion sensor accessory, the Kinect, as well as new games.

Opening statements are scheduled to begin in Hewlett-Packard's (HPQ.N) lawsuit against Oracle over the Itanium chip. HP, which is seeking up to $4 billion in damages, sued Oracle in a California state court for breach of contract after Oracle decided to discontinue support for the Itanium microprocessor.

The S&P 500 closed at its lowest since early January on Friday, dragging the Dow into negative territory for the year after a dismal U.S. jobs report added to fears that Europe's spiraling debt crisis was dragging down the world economy.

The Dow Jones industrial average .DJI fell 274.88 points, or 2.22 percent, to 12,118.57 at the close. The S&P 500 Index .SPX dropped 32.29 points, or 2.46 percent, to 1,278.04. The Nasdaq Composite .IXIC dropped 79.86 points, or 2.82 percent, to 2,747.48.

(Reporting By Francesco Canepa; Editing by Hugh Lawson)

• A Permanent Economic Emergency