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US STOCKS-Banks to lead Wall Street advance at the open

Published 01/12/2011, 09:11 AM
Updated 01/12/2011, 09:16 AM

* Portuguese bond sale sees strong demand

* JPMorgan could set a 75 cent to $1 dividend

* U.S. import prices jump in December

* Futures up: Dow 59 pts, S&P 9.1 pts, Nasdaq 11.75 pts (Updates prices, adds quote, byline)

By Rodrigo Campos

NEW YORK, Jan 12 (Reuters) - U.S. stock indexes were set to rise at the open on Wednesday after a healthy bond sale in Portugal and signs of strength in the U.S. banking sector.

European shares rallied, led by banks, on hopes euro-zone finance ministers would beef up the European Union's rescue fund and after Portugal sold 1.25 billion euros ($1.62 billion) to strong demand. Lisbon's borrowing costs fell on the 10-year issue but rose in the five-year.

Europe is the main driver after "the good Portuguese auction and belief the EU is going to step up its bailout focus," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

He said there was excitement in both European and U.S. markets on the euro zone developments. "But the euro is barely higher so there's a little disconnect," Boockvar said.

The common currency rallied on Tuesday on speculation about an expansion of the rescue fund.

U.S. bank shares will also be in focus after JPMorgan Chase & Co Chief Executive Jamie Dimon said the lender could pay an annual dividend of 75 cents to a dollar once the Federal Reserve completes stress tests of the largest U.S. banks and gives its approval..

"The trend for bank stocks has been of significant improvement," said Rick Meckler, president of LibertyView Capital Management in New York. He said JPMorgan's move is a sign lenders may have left behind their credit weakness.

JPMorgan shares rose 1.8 percent premarket to $44.38 and the Select Sector SPDR Financial ETF gained 1 percent.

Adding to the positive sentiment, Wells Fargo raised the U.S. bank sector to an "overweight" rating.

S&P 500 futures rose 9.1 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 gained 59 points and Nasdaq 100 futures added 11.5 points.

Futures barely budged aft%r Labor Department data showed U.S. import prices jumped in December as energy costs surged, a sign that while inflation may be tame domestically there are plenty of price pressures coming from overseas.

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