U.S. stock index futures dipped on Tuesday ahead of the release of minutes from the U.S. Federal Reserve, likely to provide clues to the Fed's thinking on interest rates, while the Dow approached the 11,000 mark for the first time since September 2008.

The Federal Reserve will release minutes from its March 16 meeting, at which the Federal Open Market Committee reiterated its intention to keep interest rates ultra low for an extended period. The Federal Open Market Committee will issue the minutes at around 2 p.m. EDT.

U.S. stock indexes have rallied strongly since hitting a low early this year, largely on signs of an improving economy. The S&P 500 has gained more than 12 percent since its lows in February and the Dow industrials, up more than 10 percent, are struggling to break through a barrier at 11,000.

S&P 500 futures fell 2.6 points and were below 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 fell 16 points, and Nasdaq 100 futures lost 3.5 points.

As the U.S. economy improves, Treasury debt prices have fallen, with benchmark yields touching 4 percent for the first time in 10 months, after upbeat data boosted bets the economic recovery will quicken, paring safe-haven demand for bonds.

On the M&A front, top U.S. coal miner Peabody Energy raised its offer for Australia's Macarthur Coal to $3.27 billion, but the new offer is at a discount to Macarthur's last trading price.

Microsoft Corp is set to announce its long-awaited Project Pink phones early next week, sources familiar with the matter said on Monday, as the world's largest software company attempts to gain traction in the growing market for young smartphone users.

Oil fell a few cents as the dollar firmed on Tuesday, sliding from an 18-month high near $87 reached a day earlier on data showing the pace of the U.S. economic rebound has gathered steam.

European stocks were up 0.4 percent in morning trade, led by energy shares such as BP and Total <.EU>, while Japan's Nikkei average dropped 0.5 percent on Tuesday, hit by profit-taking after successive days of 18-month highs.

U.S. stocks rose on Monday, pushing the Dow up near the 11,000 level, as signs of a turnaround in the U.S. labor market bolstered hopes the economy is strengthening and the profit outlook is brightening.

(Reporting by Edward Krudy; Editing by W Simon )

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