"Fiscal cliff" worries linger, futures flat

NEW YORK (Reuters) - Stock futures were little changed on Thursday in what could be another choppy session as the progress of fiscal negotiations in Washington continues to determine the market's fate.

President Barack Obama said there could be a quick deal to avert the "fiscal cliff" - tax hikes and spending cuts set to begin next year, possibly driving the U.S. economy back into recession - if Republican leaders agree to raise tax rates for those making more than $250,000 a year.

While Republican leaders in the House of Representatives insist that raising tax rates on the rich is a no-go, some GOP lawmakers now see it as inevitable to avoid the fiscal cliff.

"The market is going to continue to look for news out of Washington and that is going to be the main driver," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

She said with the holidays fast approaching and market participants taking days off, trading volumes will start to shrink, leaving the market vulnerable to sharp swings.

"We have some days ahead that are going to be volatile."

Several European equity benchmark indexes hit 2012 highs, boosted by hopes a U.S. budget deal will be reached before the year-end, and that the worst of Europe's debt crisis might be over. <.eu/>

CME Group , the biggest operator of U.S. futures exchanges, joined several companies Wednesday that were moving 2013 dividend payouts to this month to shield shareholders from expected tax hikes in 2013. Without action from Congress in coming weeks, tax cuts on capital gains and dividends will expire at the end of 2012.

Apple Inc's rank in China's smartphone market fell to No.6 in the third quarter as it faces tougher competition from Chinese brands, research firm IDC said Thursday. Apple's 6.4 percent drop on Wednesday was its worst daily performance since mid December 2008 and dragged down the Nasdaq Composite. Shares of Apple were down 1 percent at $533.59 in premarket trading.

S&P 500 futures dipped a point and were flat in terms of 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 were flat, and Nasdaq 100 futures dropped 2 points.

On the data front, the Labor Department releases first-time claims for jobless benefits for the latest week at 8:30 a.m. ET (1330 GMT). Economists in a Reuters survey forecast a total of 380,000 new filings compared with 393,000 in the prior week.

H&R Block , the biggest U.S. tax preparer, reported a narrower-than-expected quarterly loss as its cost-reduction measures continued to pay off.

The broad market seesawed Wednesday, with the S&P 500 dropping into negative territory before it rebounded off the 1,400 level, seen as a key technical support.

(Editing by Bernadette Baum)

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