* China stocks lead correction in global equities
* Buffett warns US on side effects of "monetary medicine"
* Futures down: S&P 11.4 pts, Dow 92 pts, Nasdaq 21 pts
(Updates with Goldman Sachs ratings)
By Edward Krudy
NEW YORK, Aug 19 (Reuters) - U.S. stock index futures pointed to a fall of about 1 percent on Wednesday as a drop in Chinese shares prompted renewed selling in global equity markets on fears stock prices have outpaced the economic recovery.
China shares slid 4.3 percent, led by recently listed stocks, as nervous investors bailed out on worries the 20 percent slide in just two weeks would deepen, shrugging off official efforts to talk up the market.
The wave of selling in global equity markets was similar to Monday's sell-off when markets took their cue from trading in Asia, with investors concerned the economic recovery would be slow.
Adding to the gloom, billionaire investor Warren Buffett, who runs insurance and investment company Berkshire Hathaway Inc, warned that although the United States was on the road to recovery, public debt was becoming unsustainable after government measures to stimulate the economy, which he termed "monetary medicine".
"China certainly is the big story again today, its been an ongoing trend," said Arthur Hogan, chief market analyst at Jefferies & Co in New York. "It's a similar story to what we've seen - we come in and Asian markets are down, and it flows through the European markets and hits our shores."
"In general it's a reset of valuations in China to match current realities in terms of the global economy," he said. "Unfortunately while that's happening the rest of the world's going to follow suit."
Some analysts are predicting that U.S. equity market will undergo a similar correction to that in China after the broad S&P 500 rallied nearly 50 percent from March lows.
In Tokyo, the Nikkei stock average lost 0.8 percent and hit a three-week closing low, while European stocks as measured by the FTSE Eurofirst 300 fell 1 percent.
S&P 500 futures fell 11.4 points, and were below 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 fell 92 points, and Nasdaq 100 futures fell 21 points.
Goldman Sachs downgraded aluminum giant Alcoa Inc to neutral, citing a lack of upside potential and historic high levels of global aluminum inventories. At the same time Goldman resumed coverage of miner Freeport McMoRan Copper & Gold Inc with a "buy" rating.
Alcoa's shares fell 3.6 percent to $12.46 in premarket trade, while Freeport McMoRan fell 1.3 percent to $59.70.
In another sign that the recovery may be slow, Hewlett-Packard Co, which reported slightly better-than-expected quarterly results after the bell on Tuesday, expressed caution about business demand, sending its shares down 2.5 percent before the bell.
Deere & Co said on Wednesday its earnings in the latest quarter fell 27 percent as ongoing weakness in its construction and forestry equipment business offset strength in demand for its tractors and harvesters, especially in North America. Its shares fell 2.8 percent to $43.85 after a initial jump.