Wall Street set to rise on Russia bets

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were set to rise Friday, with futures reversing earlier losses, as optimism over the Ukraine crisis offset concerns over the implications of U.S. air strikes on Iraq.

Futures had slumped overnight after President Barack Obama authorized relief supplies and air strikes on Iraq to protect fleeing Christians and minorities threatened with extermination by Islamic State fighters. The news stoked fears of another drawn-out conflict in the region.

Market participants said a rebound in U.S. stock index futures Friday was kindled by a report which said Russia was aiming to de-escalate the conflict in Ukraine.

A global gauge of equities was negative but pared losses and spot gold dipped after earlier hitting a three-week high. The yield in the 10-year Treasury note dipped below 2.35 percent for the first time since June 2013 before trading at 2.3915 - still a 14-month low.

Markets had been on tenterhooks, with the S&P 500 set to close a second week of losses, after Russia imposed bans on the import of Western foods in retaliation for sanctions over Moscow's support of Ukrainian separatists. A de-escalation of that conflict would remove a hurdle for the fragile economic recovery in Europe.

"The Russian economy is in recession to begin with and they have a very symbiotic relationship with Europe," said Art Hogan, chief equity strategist at Wunderlich Securities in New York.

"If they take the rational decision to de-escalate, that would be a positive," he said, adding that technical support and shorts covering positions could have also contributed to the rebound in futures.

S&P 500 e-mini futures were up 4 points and fair value - a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract - indicated a slightly higher open. Dow Jones industrial average e-mini futures rose 17 points and Nasdaq 100 e-mini futures added 6 points.

McDonald's shares fell 0.6 percent in premarket trading after it posted a drop in global sales for July.

U.S.-traded Tekmira Pharma shares jumped 15.2 percent premarket after the U.S. Food and Drug Administration modified its clinical hold status on Tekmira's experimental Ebola treatment to enable its potential use in humans infected with the virus. The Ebola epidemic now constitutes an international health risk, the World Health Organization said.

Zynga shares fell 9.9 percent premarket after it cut its 2014 forecast and said it had delayed several games including a revamped version of "Zynga Poker."

Nvidia Corp shares rose 4.2 percent premarket after the graphics chipmaker posted higher fiscal second-quarter earnings and gave a forecast for current-quarter revenues that exceeded Wall Street's estimates.

(Reporting by Rodrigo Campos; Editing by Bernadette Baum)