US STOCKS-Futures suggest modest Wall St open on M

NEW YORK, June 11 (Reuters) U.S. stock futures pointed to a flat to modestly higher open on Monday, with a flurry of deal news involving companies such as Owens-Illinois Inc. set to underpin equity gains.

Lingering worries about possible increases in interest rates, however, with most of the U.S. treasury yield curve above 5 percent, could limit upside momentum, analysts said.

Owens-Illinois Inc. said on Monday it will sell its plastics packaging business to Britain's Rexam Plc, the world's biggest can maker, for about $1.83 billion.

In other deal-related news, the Wall Street Journal reported that General Electric Co. and Microsoft Corp. discussed joining forces for a competing bid for Dow Jones & Co. in recent weeks but the idea was abandoned.

GE and Microsoft discussed matching News Corp.'s $60 per share offer for Dow Jones, according to the report in the Journal's online edition, which cited people briefed on the discussions.

The report could fuel speculation that GE, which owns NBC Universal, may seek another bidding partner if it wanted to pursue an idea of a competing Dow Jones bid further.

''It's Monday. We are prone to be moved by deals, with people checking what's happened over the weekend and very focused what announcements are being made,'' said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. ''But if yields push up further you will see some stock selling.'' S&P 500 futures were off 0.90 point, but 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 dipped by a point and Nasdaq 100 futures were off 1.75 points.

Other stocks to watch include shares of Limited Brands Inc. after Barron's newspaper reported that the stock should rise to to the $30s in a year or so once the retailer finishes its restructuring.

UBS raised its rating on shares of tax preparer H&R Block Inc. to ''buy'' from ''neutral,'' according to a report by MarketWatch.

The news service also reported that Johnson & Johnson, a diversified healthcare company and a component of the Dow Jones industrial average, was raised to ''neutral'' from ''underperform'' by Credit Suisse.

Boeing Co.'s shares were up 2.6 percent in Europe after Russian national airline Aeroflot signed a multibillion-dollar deal to buy 22 Boeing 787 Dreamliner aircraft and said it would soon sign a similar deal with Airbus.

U.S. stocks closed higher on Friday after a three-day slide as bond yields retreated and oil prices fell, easing worries about rising borrowing costs and inflation.

A flurry of encouraging corporate news, including strong monthly sales from McDonald's Corp. lent support.

REUTERS KR KN1650