* Futures rise after Fed, Treasury statement
* Treasury and Fed announce sweeping measures to shore up
confidence in Fannie Mae, Freddie Mac
* Dollar rises against yen, euro
(Updates with background throughout, adds quote, byline)
By Kristina Cooke
NEW YORK, July 13 (Reuters) - U.S. stock index futures
rose on Sunday after the U.S. Treasury Department and the
Federal Reserve announced sweeping steps to support embattled
mortgage finance companies Fannie Mae <FNM.N> and Freddie Mac
<FRE.N> if needed to bolster confidence and head off potential
steep declines in global financial markets.
The Fed said the two pillars of the U.S. housing market
could access its discount window for emergency cash while the
Treasury said it would temporarily increase its line of credit
to the two, as well as purchase equity in them, if necessary.
The move by the Fed echoed its emergency action to help
rescue investment bank Bear Stearns in March, when it opened
the discount window to investment banks for the first time
since the Great Depression.
The statement lifted futures, which now indicate that Wall
Street may rise at the open on Monday, following a harrowing
week in which the stock market was pummeled amid fears of
capital constraints at the two government-sponsored
enterprises.
Investors became increasingly concerned last week that if
Fannie and Freddie, which own or guarantee about $5 trillion in
mortgages, are hampered from doing business it would severely
harm the economy.
S&P 500 futures <SPc1> rose 11.30 points, Dow Jones
industrial average futures <DJc1> jumped 86 points and Nasdaq
100 <NDc1> futures gained 16.75 points, after the statements on
Sunday.
The dollar rose against the euro <EUR=> and the yen <JPY=>,
while U.S. Treasuries fell.
Acting before a regularly scheduled $3 billion sale on
Monday of short-term debt by Freddie Mac -- seen as a key test
of investor confidence -- the Treasury and the Fed's moves made
it clear they want the shareholder-owned lenders to continue
their pivotal role in U.S. financial and housing markets and to
remain in private hands.
"I'm sure that the administration and the Treasury and the
Fed were taking the pulse of Wall Street to see if Freddie
would be able to raise the $3 billion on Monday," said Craig
Hester, chief executive of Hester Capital Management in Austin,
Texas.
"What I would imply from this is that they got a signal
from the investment banks that it would be challenging to raise
the money tomorrow and so this decision was made to step in and
try to calm the financial markets tomorrow morning."
A senior Treasury official told reporters in a conference
call the moves were not driven by any deterioration in market
conditions since Friday, when stocks of the two companies,
known as government-sponsored enterprises, were pounded lower.
He said policymakers had consulted closely over the weekend
and added it "makes sense" to take the actions announced.
(Reporting by Kristina Cooke; Editing by James Dalgleish)
