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* U.S. looking to limit capital flows to China - BBG
* China tones down expectations ahead of trade talks - SCMP
* Washington expands blacklist on Chinese firms
* Boeing falls on fresh worries over 737 MAX
* Futures down: Dow 0.68%, S&P 500 0.64%, Nasdaq 0.63% (Adds comments, updates prices)
By Shreyashi Sanyal
Oct 8 (Reuters) - Wall Street was set to open lower for the second straight session on Tuesday, after a report that the Trump administration was moving ahead with discussions around possible curbs on capital flows into China stirred up fresh worries over the outcome of the high-level trade talks later this week.
The report came as tensions escalated after the U.S. widened its trade blacklist to include Chinese video surveillance firm Hikvision and surveillance equipment maker Zhejiang Dahua Technology among others, drawing a sharp rebuke from Beijing.
The discussions on capital flow restrictions focused on investments made by U.S. government pension funds, Bloomberg reported on Tuesday.
Adding to the pessimism, a South China Morning Post report said China had toned down its expectations ahead of the high-level trade talks set to begin on Thursday and that the Chinese delegation could depart Washington a day earlier than planned.
"I don't think there's really much hope that we are going to see a completed deal any time soon," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "For markets, it may be enough to just see a stop in the escalation."
The U.S. action pressured suppliers to the Chinese firms. Intel Corp and Nvidia Corp fell about 1% in premarket trading, while Ambarella Inc slumped 12%.
Dow heavyweight Boeing Co fell 1.5% after the Wall Street Journal reported friction between the United States and Europe could further delay efforts to resume flights of the planemaker's best-selling 737 MAX jets, which have been grounded since early 2019.
The three main indexes logged their first fall in three sessions on Monday as investors tackled mixed headlines on U.S.-China trade. Risk appetite has also been hit by weak economic indicators last week and intensifying efforts to impeach President Donald Trump.
At 8:14 a.m. ET, Dow e-minis were down 181 points, or 0.68%. S&P 500 e-minis were down 18.75 points, or 0.64% and Nasdaq 100 e-minis were down 48.75 points, or 0.63%.
The benchmark S&P 500 index is now about 3% off its record high hit in July.
Market participants will now turn their attention to the third-quarter earnings season beginning next week for evidence of the impact of the trade war on corporate America.
Analysts expect the worst quarterly profit performance since 2016, with earnings from S&P 500 companies declining nearly 3% from a year earlier, based on IBES data from Refinitiv.
Among other stocks, Nektar Therapeutics slid 6.1% after Goldman Sachs downgraded the drug developer's stock to "sell."
U.S.-listed Chinese stocks also declined, with Alibaba Group Holding, JD.com Inc and Baidu Inc down between 2% and 2.6%. (Reporting by Shreyashi Sanyal and Arjun Panchadar in Bengaluru; Editing by Sriraj Kalluvila)