* Deal to extend tax cuts boosts futures
* Ireland expected to pass austerity budget
* Futures up: S&P 10.6 pts, Dow 76 pts, Nasdaq 18.25 pts
* For up-to-the-minute market news see []
(Writes through, adds details, quote, byline)
By Leah Schnurr
NEW YORK, Dec 7 (Reuters) - U.S. stock index futures rose
on Tuesday after U.S. President Barack Obama forged a
compromise with Republicans to extend Bush-era tax breaks for
two years.
Obama announced the deal to renew tax cuts for wealthier
Americans -- as Republicans had wanted -- as well as the middle
class. The deal was expected to extend breaks on dividends and
capital gains. For details, see []
Investors have said the tax cuts were necessary to keep the
fragile economic recovery on track, claiming the cuts would
prompt more spending and investing. Keeping the capital gains
tax steady could make investors less inclined to sell shares.
The Financial Select Sector SPDR exchange-traded fund <XLF.P>
rose 0.8 percent.
"From a psychological standpoint, this probably will
continue to boost the markets in the sense that this most
likely will lead to an expansion in economic activity," said
Peter Cardillo, chief market economist at Avalon Partners in
New York.
"People are going to be feeling a little bit better, and
that means they'll be maybe even spending a little bit more."
Futures shrugged off disappointment there was no further
action out of the euro zone to deal with its debt crisis. After
a five-hour meeting Monday, ministers said they would not
introduce any measures to tackle the threat of contagion.
[]
But in a positive sign, Ireland was expected to pass a
record austerity budget through parliament, averting the risk
of a snap election that could have plunged the country into a
deeper crisis. []
S&P 500 futures <SPc1> rose 10.6 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 <DJc1> gained 76
points, and Nasdaq 100 futures <NDc1> added 18.25 points.
China is likely to raise interest rates in the coming days
in a demonstration of the government's resolve to tame
inflation, an official newspaper reported. []
Investors are looking to China to help drive global
economic growth, and moves to rein in its economy have been
negative for the market. However, Cardillo said the worries
have already been priced in and shouldn't derail the rally.
The U.S. government sold its remaining shares in Citigroup
Inc <C.N> for $4.35 apiece, marking an exit from ownership in
the bailed-out bank, with a $12 billion gross profit for
taxpayers. Its shares were off 0.2 percent to $4.44 in
premarket trading. []
Stocks ended flat Monday as worries about Europe's
situation frustrated investors. Analysts still see the S&P 500
breaking out of its recent range soon and surpassing an
intraday high for the year just above 1,227 reached on Nov. 5.
Analysts view key resistance for the index at 1,228 because
it's just above the year's high and coincides with the 61.8
percent Fibonacci retracement of the 2007-2009 bear market
slide, a key technical indicator. The S&P closed at 1,223.12 on
Monday.
(Editing by Jeffrey Benkoe)
