US stock index futures rose strongly today, building on the previous week's gains, as optimism grew that an upcoming European Union summit would break new ground to resolve the euro zone debt crisis.
President Nicolas Sarkozy and German Chancellor Angela Merkel are meeting inParis today, under pressure to iron out differences on how to centralise control of euro zone budgets to resolve the crisis.
The two will try to reach common ground on measures to boost coercive budget discipline in the region, likely through an EU treaty change, which they want all 27 EU leaders to approve.
While the summit could still disappoint investors, equities have been helped recently by rising hopes of forthcoming decisive action in the euro zone. Indexes posted their largest weekly percentage advance last week since mid-March 2009. Those gains also came on a US unemployment rate that unexpectedly dropped to a 2.5 year low.
"There's a lot of optimism built in that Europe is finally getting its act together and that the summit will be fruitful," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.
"There's a lot of pressure for them to deliver and satisfy, but the market wants to go higher, so it will take more than a slight delay in the plans to cause us to turn around significantly."
Adding to the belief that Europe would be taking adequate steps to address its issues, Italy unveiled a $40.32 billion package of austerity measures, which eased tensions surrounding the country's finances. European stocks rose 1 per cent.
S&P 500 futures rose 16 points and were above 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 added 135 points and Nasdaq 100 futures rose 29 points.
Despite the previous week's gains, the S&P 500 on Friday failed to break through technical resistance near its 200-day moving average. Breaching that level could signal more gains.
Investors will be looking ahead to the Institute for Supply Management's November non-manufacturing index, which will be released at 10am. Economists forecast a reading of 53.5 versus 52.9 in October. Last week, the ISM's November manufacturing index rose more than expected.
In addition, October factory orders are seen dropping 0.3 per cent after a 0.3 per cent rise in September.
Germany's SAP announced a $3.4 billion cash deal to buy SuccessFactors, sending shares of the web-based software company up 52 percent to $39.95 in premarket trading.
Commercial Metals Co rejected investor Carl Icahn's buyout bid, saying the offer substantially undervalued the company.
US stocks ended flat on Friday as investors were reluctant to make bets going into the long weekend after Wall Street's best week in almost three years.
Reuters
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