Wall Street set to open higher as bond market worries ease

By Sruthi Shankar

(Reuters) - Wall Street was set for a positive session on Thursday, as speculation over China halting U.S. bond purchases eased and investors focused on quarterly earnings reports and rising oil prices.

U.S. crude futures rose to $63.82 a barrel, its highest since December 2014, boosted by a surprise drop in U.S. production and lower crude inventories.

Positive brokerage recommendations on oil majors Exxon and Chevron lifted their shares up about 0.3 percent in premarket trading.

"It's back to a generally positive mode," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

At 8:34 a.m. ET (1334 GMT), Dow e-minis were up 36 points, or 0.14 percent, with 21,314 contracts changing hands.

S&P 500 e-minis were up 4.5 points, or 0.16 percent, with 118,575 contracts traded.

Nasdaq 100 e-minis were up 11.25 points, or 0.17 percent, on volume of 28,769 contracts.

The S&P and the Nasdaq snapped their six-day rally on Wednesday after Reuters reported Canada is increasingly convinced U.S. President Donald Trump would soon announce an exit from the North American Free Trade Agreement.

"I think it is very disruptive. We've seen a lot of firms concerned about supply chains going forward, and many have tried to secure alternative supply-chains if the President pulls out of NAFTA. But the market is just taking this in a stride now," Brown said.

U.S. Treasury yields eased from their 10-month highs after China dismissed a Bloomberg report saying Chinese officials had recommended halting the country's U.S. bond purchases.

Investors will be looking at the fourth-quarter earnings season, which begins on Friday with big U.S. lenders JPMorgan and Wells Fargo.

Earnings for S&P 500 companies are expected to increase by 11.8 percent on average, with the biggest contribution from the energy sector, according to Thomson Reuters I/B/E/S.

Delta Air Lines was up 3.7 percent after the company's profit for the fourth quarter beat estimates.

Xerox shares jumped 6.10 percent after the Wall Street Journal reported the copier maker was in deal talks with Japanese camera maker Fujifilm Holdings that could include a change in control of Xerox.

Data showed U.S. producer prices fell in December for the first time in nearly 1-1/2 years amid declining costs for services, which could temper expectations that inflation will accelerate in 2018.

Separately, the number of Americans filing for unemployment benefits unexpectedly rose last week.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)