U.S. stock futures point higher on takeover deals

NEW YORK, July 24 (Reuters) U.S. stock index futures pointed to a higher market open on Monday as several takeover deals looked set to help stocks recover from Friday's declines and kick off a busy earnings week on a positive note.

Advanced Micro Devices Inc, the No. 2 supplier of computer processors, said on Monday it would acquire graphics chip maker ATI Technologies Inc. for .4 billion in cash and stock to expand its product mix and compete with Intel Corp.. For details, see ID:nN24282278.

Hospital operator HCA Inc. is close to an agreement to be acquired by an investor group for about billion, sources familiar with the situation said on Sunday. ID:nN23277499 ''The fact that M&A Monday continues is basically an indication that corporations feel good about economic activity going forward even though a slowdown is in sight,'' said Peter Cardillo, chief market analyst and chief strategist at SW Bach and Co. ''They're still putting their cash to use.'' S&P 500 futures were up 5.6 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 8.5 points, and Nasdaq 100 futures were up 39 points.

Toy maker Hasbro Inc. reported earnings declined, but met Wall Street forecasts ID:nWEN1719.

Drug maker Schering-Plough Corp. reported a second-quarter profit on sharply higher sales of its cholesterol drugs. ID:nWEN1720 Other companies set to report earnings include phone company BellSouth Corp. and drug maker Merck&Co..

Earnings expectations for the second quarter have edged higher in the past few weeks. Reuters Estimates projects S&P 500 earnings grew 10 percent in the second quarter, up from an expectation of 9.2 percent last week.

Oil futures fell in electronic trading, pushed lower by diplomatic efforts to resolve the conflict in the Middle East, but fighting still raged in the region. U.S. Secretary of State Condoleezza Rice flew to Beirut on Monday after calling for an urgent cease-fire on Sunday.

On Friday, the Dow Jones industrial average dropped 59.72 points, or 0.55 percent, to end at 10,868.38. The Standard&Poor's 500 Index .SPX> slid 8.84 points, or 0.71 percent, to finish at 1,240.29, resulting in a decline of 0.6 percent for the year. The Nasdaq Composite Index .IXIC> sank 19.03 points, or 0.93 percent, to close at 2,020.39.

REUTERS SBA VV1712