Wall St set to extend Friday's rally as oil stabilizes

By Tanya Agrawal

REUTERS - Wall Street was set to open higher on Tuesday, extending a rally from Friday after an extended weekend, as cautious investors looked for bargains among beaten-down stocks and as oil prices stabilized.

Brent crude oil prices hit a 12-day high after four of the world's largest producers agreed to freeze output, but quickly gave up those gains to trade flat as investors had hoped for an outright cut in supplies. [O/R]

U.S. crude was around $30 per barrel and Brent at about $33.

"We are looking at a rally at the open helped by the recovery in oil prices," said Peter Cardillo, chief market economist at First Standard Financial in New York.

"The freeze in output is the first step toward agreeing to formal cuts and I expect to see cuts by the end of the quarter."

Slumping oil prices, fears of a China-led slowdown in the global economy, uncertainty over the central banks' monetary policies and unflattering U.S. corporate reports have roiled the markets this year.

The S&P 500 is down more than 8 percent since the beginning of the year, led mainly by financial and commodities-related stocks.

Banks again gained on Tuesday after the S&P financial index posted its largest daily percentage gain since November 2011 on Friday.

Shares of Bank of America, Goldman Sachs and JPMorgan were up about 1.5 percent in premarket trading.

S&P 500 e-minis were up 20.75 points, or 1.12 percent, with 636,360 contracts traded at 8:38 a.m. ET (1338 GMT).

Nasdaq 100 e-minis were up 59 points, or 1.47 percent, on volume of 95,748 contracts.

Dow e-minis were up 168 points, or 1.06 percent, with 96,777 contracts changing hands.

ADT surged 53.8 percent to $41.03 after private equity firm Apollo Global Management agreed to buy the electronic security services provider for $7 billion. Apollo was down 4.9 percent at $12.75.

Freeport-McMoRan was up 6.7 percent at $5.9 after the copper miner agreed to sell a stake in one of its mine to Sumitomo Metal Mining.

Community Health Systems slumped 22 percent to $14.56, set to open at a seven-year low, after the hospital operator posted an unexpected fourth-quarter adjusted loss.

Investors already nervous about the health of the global economy have found little relief in U.S. corporate reports. S&P 500 companies' fourth-quarter earnings are expected to have fallen 3.9 percent from a year earlier.

Investors will also be keeping an eye on speeches by the presidents of the Philadelphia Fed, Minneapolis Fed and Boston Fed, who will give their views on the economy on Tuesday.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)