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The announcement of 2,000 job cuts on Monday came a month after the Canadian company revealed that it would reduce headcount for the first time in a decade.

One analyst said the job cuts were slightly deeper than expected but were key to RIM's recovery from a slump triggered by product delays and intense competition from Apple's iPad and iPhone as well as devices powered by Google's Android software.

RIM's U.S.-listed stock, already near multi-year lows, was down as much as 2 percent before the market opened. It was trading down 1.8 percent at $27.40 on the Nasdaq just before the open.

"This is not totally unexpected. I think the size of (the cuts) is a little bit bigger than what they were intimating before," said Jefferies & Co analyst Peter Misek. "I think this is obviously realigning the cost structure to a new growth, or sales, reality."

RIM said one-time charges from the job cuts were not included in its outlook for the second quarter or for the full year, and it would explain the financial impact of the cuts when it reports second quarter results on September 15.

RIM said the job cuts are "a prudent and necessary step" for its long-term success.

"Cost-cutting is unlikely to change the competitive position for the company" or accelerate RIM's revenue growth, BGC Partners analyst Colin Gillis said.

Job cuts would help if the company were moving downstream toward entry and mid-market phones, but in such a case even 11 percent job cuts wouldn't be enough, he said.

If RIM was still chasing the high-end market for smartphones, it shouldn't be focused on trimming expenses, but on executing more effectively, Gillis said.

The BlackBerry maker also announced a string of changes to executive responsibilities and, in the latest departure, said Chief Operating Officer Don Morrison would retire.

Morrison, currently on temporary medical leave, was departing after more than 10 years at the company.

A stream of senior RIM executives have defected lately, including two who left for rival Samsung Electronics in a month.

RIM said when it reported fiscal first-quarter results last month that it would cut jobs to stay competitive, but it gave no details at the time. The job cuts bring RIM's headcount to about 17,000 people.

Misek, who has an 'underperform' rating on RIM's stock, said one to watch was when RIM would adopt its new QNX operating system on its smartphones.

"I think the key here, more than ever, is when do their products launch and what kind of reception will they have and most importantly, when will QNX come in. We don't think those answers are here yet," he said.

(Reporting by S. John Tilak, Euan Rocha in Toronto, Aftab Ahmed in Bangalore; editing by Janet Guttsman and Frank McGurty)

At 0813 GMT, futures for the S&P 500 were down 0.81 percent, Dow Jones futures down 0.79 percent and Nasdaq 100 futures down 0.59 percent.

Tokyo's Nikkei average .N225 fell 0.8 percent, while European shares lost ground in early trade, halting a one-week rally, driven lower by banking stocks such as Barclays (BARC.L), BNP Paribas (BNPP.PA) and UniCredit (CRDI.MI), down 2.4-2.7 percent. .EU

A divided U.S. Congress pursued rival budget plans on Sunday that appeared unlikely to win broad support, pushing the country closer to a debt default.

Analysts still expect a last-minute deal to raise the U.S. debt ceiling and avoid a default next week. But the impasse pushes the United States a step closer to losing its coveted triple-A credit rating as it seems unlikely that Democrats and Republicans will agree before the next election in November 2012 on how to find $4 trillion through government spending cuts and revenue increases.

White House Chief of Staff Bill Daley warned over the weekend there would be a "few stressful days" ahead for financial markets, with the deadline to lift the $14.3 trillion U.S. borrowing limit only nine days away.

DEBT DEAL

However, Treasury Secretary Timothy Geithner said on Sunday it was unthinkable for the United States not to meet its debt obligations and was confident a debt deal would be reached.

Concerns that a deal would not be forthcoming have weighed on equity markets, though some positive earnings news helped offset the issue. Major indexes notched solid gains last week, with the S&P and Nasdaq rising more than 2 percent.

"The longer we go without a deal, the more you're going to see concerns on the negative side," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

"I don't think the initial reaction was overdone at all. This has to get behind us before the market can trend higher."

Also rattling investors on Monday, credit ratings agency Moody's cut Greece's sovereign debt by three notches on Monday to 'Ca', just one notch above default. The agency said the new bailout package set a negative precedent for creditors of other debt-burdened countries. The downgrade means Greece now has the lowest rating of any country in the world covered by Moody's.

Investors awaited earnings from a raft of companies on Monday, including Texas Instruments (TXN.N), Radioshack Corp (RSH.N), Kimberly-Clark (KMB.N), Broadcom (BRCM.O) and Anadarko Petroleum (APC.N).

On Friday, promising chipmaker earnings and optimism that a solution was on the horizon for the U.S. debt stalemate triggered a move into growth-oriented shares such as techs.

The Dow Jones industrial average .DJI dipped 43.25 points, or 0.34 percent, to 12,681.16. The Standard & Poor's 500 Index .SPX added 1.22 points, or 0.09 percent, to 1,345.02. The Nasdaq Composite Index .IXIC gained 24.40 points, or 0.86 percent, to 2,858.83.

(Editing by Jane Merriman)

With time running out, Republican and Democratic lawmakers split into opposite camps and held talks among themselves. There were no signs of a deal emerging to head off a default in nine days that could trigger global economic calamity and downgrade America's Triple-A credit rating.

Lawmakers missed a self-imposed deadline of producing a deficit-reduction deal by the time Asian markets opened on Sunday, but planned to outline a proposal Monday. A deficit deal is needed to permit a vote to increase the $14.3 trillion U.S. debt ceiling by August 2.

President Barack Obama heard details of a Senate Democratic plan that would rely on spending cuts, not new tax revenue, which would violate one of his key demands.

Edgy markets responded to the stalemate, but not in dramatic fashion.

Although some had predicted global markets would fall apart without a deal before the Asian markets opened Sunday evening, the reaction was relatively modest as investors pulled out of riskier investments like stocks and headed for safe haven assets like gold, pushing the metal to a new record.

U.S. stock futures fell, signaling a poor open for U.S. markets and showing that investors were increasingly worried about the failure of legislators to coalesce around one approach. Early currency trading suggested a move away from the U.S. dollar, with the biggest drop in the greenback coming against the Swiss franc.

"The fact that they seem to be jumping from one type of proposal to another and not converging on anything is beginning to worry markets," said Steven Englander, head of G10 FX strategy at Citigroup.

"I also think damage is being done by setting deadlines that aren't going to be met," he said.

The battle is over how deeply to cut government spending on social programs and whether to increase taxes, reflecting the challenges of divided government in an age when Republicans and Democrats are beholden to their right and left bases of support.

Democrats want to ease the pain of spending cuts by increasing taxes on the wealthy, a prospect Republicans oppose.

"This is a like a long labor, with the dad in the waiting room, waiting to see if it's a boy or a girl and the doctor's coming out and saying 'I can't tell you yet,'" Republican Representative Jack Kingston told Reuters.

(Additional reporting by Caren Bohan, Dave Clarke, Donna Smith, Andy Sullivan, Laura MacInnis and Alister Bull; writing by Steve Holland; editing by Sandra Maler and Vicki Allen)

Wall Street is set to close its worst three months in a year as July draws to a close this week after a roller-coaster ride for markets. Stressed out fund managers hitting the beach in August may find themselves fiddling with their BlackBerrys more than the little umbrella in their cocktails.

"I need a vacation, man. After all the stuff that's happened in the last three months I'm pretty much shot, I'm getting weird, even my 6-year-old looks at me," said one New Jersey-based fund manager, who was packing his bags for a destination in the Caribbean as temperatures topped 100 degrees Fahrenheit in New York City.

With euro zone leaders having reached a deal for yet another bailout for debt-laden Greece, investors will be free to chew over the rancor in Washington with even more attention.

Negotiations between President Barack Obama and the top Republican in the House of Representatives, John Boehner, still looked far from a deal to avert a looming U.S. default, lawmakers said on Friday, raising the likelihood of more volatility in the coming week if the weekend ends with no solution.

"It's likely an agreement in any form will cause a relief rally for equities," said Glenn Starkman, global head of sales trading at Dahlman Rose in New York.

"Coming on the heels of overall pretty good earnings numbers and some sort of resolution in Greece and that could make for a rally in the market," he said.

But on the other side of the coin, the prolonged and partisan dispute over solving the country's debt crisis means there is still a big downside risk.

"Who knows where that is going to go," said Nick Kalivas, an analyst at MF Global in Chicago. "We're vulnerable to a buyers' strike if we don't get any news."

In addition, the corporate earnings season suggests other risks could dog the market. Despite generally good results so far, there have been some worrisome signs. The S&P 500 rallied 6 percent in the run-up to reporting season, but earnings misses from big industrial names like Rockwell Collins and Caterpillar Inc weighed on the Dow and S&P 500 on Friday.

Earlier in the week several big consumer names such as Whirlpool and Pepsi warned about sluggishness in developed markets, sending their shares sharply lower.

"The market still has a high degree of skepticism in it," Kalivas said, summing up the earnings season so far.

Kalivas said he will be closely following earnings from sector and economic bellwethers this week. Those include the package delivery company UPS, chipmaker Texas Instruments, and online retailer Amazon.

Around 30 percent of the S&P 500's $12.3 trillion market cap have reported earnings so far. They have outpaced consensus estimates by 3.8 percent, and only 7 percent have missed estimates, according to data from Morgan Stanley.

But share prices of those that have fallen short of estimates have taken a severe beating. Given the fragile sentiment a few more prominent misses could derail the market.

"The market is punishing these misses more than it is rewarding beats, an asymmetry we have been calling for and we forecast will continue," Morgan Stanley's U.S. equity strategist Adam Parker wrote in a note to clients.

"Our view remains that first half of the year numbers are achievable, but the second half of the year looks challenged," he said.

This week is also a big week for economic data. Fears of a slowdown in the economy have been a large driver of market volatility over the last few months, and the coming releases will be parsed very closely.

They include early regional manufacturing data from Chicago and New York, a reading of consumer sentiment, and a first reading of U.S. growth for the second quarter, expected to show the economy grew just 1.9 percent in the period.

Bob Doll, chief equity strategist at BlackRock, one of the world's largest fund managers with around $1.6 trillion of equities under management, said last week that the U.S. economy is at a critical juncture.

Doll points out that since 1960 every time year-on-year growth has fallen under 2 percent the U.S. economy has gone into recession.

"Our bottom line view is that investors should maintain a reasonably constructive bias toward risk assets, but should also be prepared to scale back exposure if evidence of economic growth acceleration does not materialize," said Doll.

(Additional reporting by Chuck Mikolajczak; Editing by Leslie Adler and Maureen Bavdek)