US stocks set to open up; Target forecast upbeat

NEW YORK, June 20 (Reuters) U.S. stock index futures pointed to a higher market opening on Tuesday as an upbeat forecast from retailer Target Corp. overshadowed concerns about interest rates and geopolitical tensions over North Korea and Iran.

Target, the second largest U.S. discount chain, said on Monday it expects June sales at stores open at least a year to be at the upper end of a forecast range. For details, see ID:nN19369343.

Shares of Target were up 1.2 percent to .70 on the Inet electronic brokerage system in light trading.

No. 1 U.S. grocery chain Kroger Co. posted higher first-quarter earnings on Tuesday, pushing its shares up 3.4 percent to .13 on Inet.

S&P 500 futures were up 2.5 points, above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures rose 24 points, and Nasdaq 100 futures were up 1.75 points.

The Commerce Department said housing starts rose in May at a rate faster than economists forecast, but permits for future projects declined. ID:nN20412104 ''Although housing starts were strong -- and stronger than expected -- what investors will focus on is the building permits number, a component of the index of leading economic indicators ... and that was a fairly sharp decline,'' said Hugh Johnson, chief investment officer at Johnson Illington Advisors in Albany, New York.

''My inclination is investors are worried that the economy and earnings will not be as strong as forecast,'' Johnson said.

U.S. stocks fell sharply on Monday after another Federal Reserve official warned about inflation, renewing worries the Fed would keep raising interest rates. The U.S. central bank meets on June 28-29 and is expected to raise its benchmark fed funds rate.

U.S. stocks were held back by worries over a possible North Korean missile launch on Monday but clouds and storms closed in on Tuesday, potentially delaying a flight regional powers have warned the reclusive state not to launch.

Another geopolitical hurdle for stocks is tension between Iran and the United Nations. U.S. crude oil futures rose 44 cents to .42 a barrel in electronic trading.

REUTERS DKS KP1856