January 3, 2020 / 1:16 PM / 23 days ago

US STOCKS-Futures slump after U.S. kills top Iranian commander

* Energy stocks, gold miners track higher commodity prices

* Bank stocks fall as U.S. bond yields slide

* Incyte Corp plunges as its drug fails a trial

* Futures slump: Dow 0.97%, S&P 1.10%, Nasdaq 1.24% (Updates prices)

By Manas Mishra

Jan 3 (Reuters) - U.S. stock index futures shed about 1% on Friday after a U.S. air strike in Iraq killed a top Iranian commander, sharply escalating geopolitical tensions in the Middle East and denting risk appetite.

Iran's Supreme Leader Ayatollah Ali Khamenei vowed harsh revenge after Qassem Soleimani, head of Iran's elite Quds Force, was killed in the air strike in Baghdad that was authorized by President Donald Trump.

The flaring tensions sent prices of perceived safe-haven assets soaring, while threatening to derail a recent rally in stocks.

Optimism over an initial trade deal between U.S. and China and an improving global outlook in recent weeks have encouraged risk-on sentiment, helping extend Wall Street's longest bull run on record.

The three main indexes closed at record highs on Thursday as fresh steps by China's central bank to boost its economy added to investor optimism over trade.

At 7:18 a.m. ET, Dow e-minis were down 279 points, or 0.97%. S&P 500 e-minis were down 35.75 points, or 1.1% and Nasdaq 100 e-minis were down 110.5 points, or 1.24%.

Tracking higher oil prices, shares of oil majors Exxon Mobil Corp and Chevron Corp rose 1.3% and 1.2%, respectively, in premarket trading.

Marathon Oil Corp, Occidental Petroleum Corp and Schlumberger were some of the top gainers among S&P 500-listed stocks, rising about 1.7% and 3.3%.

American Airlines Group Inc and Southwest Airlines Co fell 0.8% and 1.3% on prospects of higher costs.

Gold prices rose 1%, driving gains in miners such as Newmont Goldcorp.

Shares of interest-rate sensitive banks also tumbled, with Bank of America Corp and Citigroup Inc down between 1.9% and 2.3% as investors fleeing to the safety of U.S. Treasury pressured yields.

Drugmaker Incyte Corp slumped 11.6% after a late-stage clinical trial of its experimental drug for treating an acute form of transplant rejection failed. (Reporting by Manas Mishra and Medha Singh in Bengaluru; Editing by Anil D'Silva)

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