* Citigroup jumps on smaller-than-expected loss
* Google, Microsoft, Merrill disappoint on earnings
* Oil reverses steep 3-day slide, turns higher
* Report Freddie Mac mulling $10 bln stock sale
(Updates with futures erasing losses to trade flat, adds
details throughout)
By Ellis Mnyandu
NEW YORK, July 18 (Reuters) - U.S. stock index futures were
little changed on Friday as No. 1 U.S. bank Citigroup <C.N>
reported a smaller-than-expected quarterly loss, offsetting
disappointing results from Merrill Lynch <MER.N> and two
technology bellwethers.
Shares of Citigroup rose more than 5 percent before the
bell after the Dow component reported a 54 cents per share loss
compared with an expected loss of 67 cents. For details, see
[].
The positive news from Citi, following a day after
reassuring financial results from No. 3 U.S. bank JPMorgan
Chase & Co <JPM.N>, helped European stocks and the dollar to
rise and could give investors an incentive to snap up bargains
in the embattled financial sector.
"With Citigroup reporting a smaller-than-expected loss, it
appears the worst may be over in the subprime mess. So when you
look at these bank companies, they look like they are OK," said
Andre Bakhos, president of Princeton Financial Group in
Princeton, New Jersey.
"It appears investors and analysts have overcompensated for
the downside. With the Federal Reserve willing to help, I guess
for now there appears to be be a bandage on the wound."
S&P 500 futures <SPc1> rose 5.80 points and were about even
with 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 <DJc1> gained 46
points, and Nasdaq 100 <NDc1> futures gained 3 points.
Even so, news of a much larger-than-expected loss at
Merrill Lynch could fuel caution. Shares of the third-largest
U.S. investment bank fell 5.1 percent before the bell.
[]
Two tech sector leaders disappointed investors with their
earnings and outlook. Shares of Google <GOOG.O>, the Internet
search company, fell more than 7 percent at $495 before the
bell after the company posted a weaker-than-expected 35 percent
rise in net profit. []
Microsoft <MSFT.O> shares were down 5.7 percent at $25.94
before the bell after the software maker, also a Dow component,
gave a forecast below Wall Street's expectations.
[].
Shares of Freddie Mac <FRE.N> could reverse two days of
strong gains following a report by the Wall Street Journal that
the home financing provider is considering raising capital by
selling as much as $10 billion in new shares to investors,
The Wall Street Journal report cited people familiar with
the matter, just days after the U.S. Treasury and Federal
Reserve announced a plan to shore up the balance sheets and
borrowing capabilities of Freddie Mac and Fannie Mae <FNM.N>.
Freddie Mac shares were down 4 percent at $8, while Fannie
Mae shares were off 2.8 percent at $10.62. U.S. stocks soared
on Thursday on a sharp drop in oil and several unexpectedly
strong earnings reports.
(Editing by Kenneth Barry)
