Stock index futures rise ahead of bank results

LONDON (Reuters) - Stock index futures signaled a modest rebound on Wall Street on Thursday ahead of results from companies including Merrill Lynch (MER.N), Bank of New York Mellon (BK.N) and Washington Mutual (WM.N).

On the M&A front, the Wall Street Journal reported that Air France-KLM (AIRF.PA) could provide strategic or financial help in Delta Air Line's (DAL.N) pursuit of a merger with another airline.

By 6:00 a.m. EST, Dow futures were up 0.4 percent, S&P futures were up 0.5 percent, while Nasdaq futures were up 0.9 percent, recovering from Wednesday's losses.

The pan-European FTSEurofirst 300 index was 0.5 percent higher, and Asian stocks had also risen.

Markets will eye Federal Reserve Chairman Ben Bernanke's testimony on the economy before the House Budget Committee at 8:00 a.m. EST. Interest rate futures imply a 66 percent chance of an aggressive 50 basis points rate cut to 3.75 percent from the Fed before the month is out.

Focus will also be on a conference call President George W. Bush holds with Congressional leaders to discuss the economy. News that a legislative package to stimulate the U.S. economy and avert a recession could be signed into law within a month lent some support to stocks on Wednesday.

"It is fiscal policy that works during a balance sheet recession like the one we are experiencing now, and the fact that such measures are being discussed at the first sign of recession suggests the government may provide the necessary stimulus before it is too late." Richard Koo, chief economist at Nomura Securities, said in a note.

U.S. stocks fell on Wednesday, after Intel Corp (INTC.O) posted both a disappointing profit and outlook, driving the S&P 500 to its lowest closing level in 14 months.

The poor results from Intel, the world's largest chip maker, came on the heels of poor retail sales data on Tuesday, dismal banking results and a slew of indicators showing the U.S. economy may be on the brink of a recession.

But stocks had a rollercoaster ride on Wednesday, with the Dow rising and falling in a range as wide as 221 points.