Stock index futures eased on Monday after data showing a decline in European private sector activity last month and a lower target for China growth gave investors reason to pause.

Early losses eased, a sign that investors were looking to buy on dips, with cheaper valuations still an allure to those betting on an improving U.S. economy.

I think it is a good place for the market to pause, said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. I am not expecting a big plunge, valuations will kick in.

S&P 500 futures fell 2 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 dipped 15 points, and Nasdaq 100 futures lost 3 points.

European and Asian stocks dropped, with shares in euro zone peripheral countries such as Italy and Spain among the worst hit, after data showed the region was likely to slide back into recession.

Chinese Premier Wen Jiabao cut his nation's 2012 growth target to an 8-year low of 7.5 percent and put a priority on boosting consumer demand in hopes of weaning the economy off a reliance on external demand and foreign capital.

I would recommend buying on dips because I think we will continue to see the jobs growth showing improvement, said Peter Cardillo, chief market economist at Rockwell Global Capital.

European markets were also pressured ahead of a March 8 deadline for Greece and private bondholders to complete a debt swap. Failure to reach agreement would put the country back on the brink of a messy default.

The FTSEurofirst 300 <.FTEU3> fell 0.2 percent. Hong Kong shares <.HSI> dropped 1.4 percent

The Institute for Supply Management releases its February non-manufacturing index at 10 a.m. EST (1500 GMT), with economists in a Reuters survey forecasting a reading of 56.1 versus 56.8 in February. A weaker-than-expected manufacturing survey last week will keep investors on guard.

Also at 10 a.m., the Commerce Department releases January factory orders. Economists look for a drop of 1.5 percent after a 1.1 percent rise in the previous month.

American International Group Inc is selling part of its stake in AIA Group Ltd <1299.HK> to raise about $6 billion to help repay a huge federal government bailout. AIG shares slipped 0.5 percent to $29.64.

The S&P and Nasdaq notched their eighth week of gains out of the last nine, but momentum ran out on Friday as stocks ended lower in a thinly traded session. The S&P 500 has rallied 25 percent since closing lows in October with few pullbacks.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

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