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Futures rise on hopes for ECB action, merger activity

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[August 25, 2014] By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stock index futures were modestly higher on Monday, indicating the S&P 500 would open near record levels, amid corporate merger activity and as hopes grew for more monetary stimulus in European markets.

U.S. investors took cues from Europe, where an index of major shares rose 0.7 percent after European Central Bank President Mario Draghi said Friday the ECB was prepared to respond with available tools if inflation dropped further. Investors took this to mean the ECB could start an asset purchase program or adopt other stimulus measures in the coming months, which would boost assets like stocks and bonds.

Draghi spoke at a global central banking conference in Jackson Hole, Wyoming. U.S. Federal Reserve Chair Janet Yellen spoke, too, but didn't provide hints on the timing of any interest rate hikes, contributing to a modest equity market decline on Friday.

InterMune Inc jumped 37 percent to $73.48 in premarket trading after Roche Holding AG agreed to buy the biotechnology company for $8.3 billion in cash. The deal is the latest vote of confidence in the biotech sector, which many - including Yellen - worry is overvalued.

S&P 500 e-mini futures  rose 6 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, indicating a higher open. Dow Jones industrial average e-mini futures added 44 points and Nasdaq 100 e-mini futures rose 15.5 points.

U.S. stocks have been strong of late. Major indexes closed a third week of gains Friday, with the Dow and S&P enjoying their best weeks since April. The S&P hit an intraday and closing high last week, and market participants are looking for the benchmark index to pierce the 2,000 level for the first time.

Burger King is in talks to acquire Canadian coffee and doughnut chain Tim Hortons Inc, in a deal that would be structured as a so-called tax inversion transaction to move Burger King's domicile to Canada, which has lower overall corporate taxes.

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The Wall Street Journal reported that activist Investor Engine Capital LP wants Ann Inc  to sell itself, believing the company could fetch around $2.5 billion.

A cyber attack took down Sony Corp's  PlayStation Network over the weekend, though it was back online on Monday.

Investors continued to eye tensions between Ukraine and Russia, with Ukraine's military saying its government force had engaged with a separatist armoured column near the southeastern town of Novoazovsk, not far from the Russian border.

Traders are looking ahead to a read on July new home sales, as well as August data on the services sector from financial data firm Markit. The Markit data will be released at 9:45 a.m. EDT (1345 GMT), and the housing data at 10:00 a.m.

(Editing by Bernadette Baum)

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