Stock index futures rose on Monday, the first trading day after government data showed the economy added the largest number of jobs in three years, boosting hopes the recovery was accelerating.

That view was cautiously echoed by the Obama administration over the long Easter holiday weekend. White House economic advisors Lawrence Summers and Christina Romer said the process of job creation had begun but warned of a long road ahead.

Nonfarm payrolls increased by 162,000 in March, Friday's report showed. That was below consensus expectations, but stronger gains in private-sector hiring were seen as further evidence the economy was on the mend. Markets were closed on Friday for the Good Friday holiday.

Peter Boockvar, equity strategist at Miller Tabak & Co, said although stronger private sector job creation was good news for stocks, investors will have to face higher interest rates as yields on U.S. Treasury debt rise.

The flip side is the market is going to also have to deal with the consequence of higher interest rates as the 10 year bond yield is matching the highest level since October 2008. So the tug of war between the two could be on full display today, he said.

S&P 500 futures rose 4.6 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. Dow Jones industrial average futures gained 41 points, and Nasdaq 100 futures added 9.75 points.

SandRidge Energy Inc , an oil and gas exploration company, on Sunday said it agreed to buy rival Arena Resources Inc for about $1.55 billion, boosting its exposure to oil as the price of natural gas falls.

The transaction values Arena shares, which closed on Thursday at $34.26, at $40 each. The shares rose 8 percent to $37 in premarket trade on Monday.

A report from the Institute for Supply Management is expected to show the service sector grew in March after expanding at its fastest pace in more than two years the previous month. The ISM's non-manufacturing index is expected to rise to 54 from 53, according to a Reuters poll.

A separate report is expected to show U.S. pending home sales were flat in February after unexpectedly falling in the previous month when bad weather hit large areas of the country. Stabilization in the housing market is seen key to getting the economy back on track.

The National Association of Realtors report and the ISM services data are due at 10 a.m. (1500 GMT)

U.S. Treasury Secretary Timothy Geithner said on Saturday he was delaying an April 15 report on whether China manipulates its currency but pledged to press for a more flexible Chinese currency policy. Investors fear the issue of China's currency could help spark a trade war between the two countries.

(Reporting by Edward Krudy; Editing by Padraic Cassidy)

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