Stock futures up as European debt worry ebbs, banks eyed

U.S. stock index futures rose sharply on Wednesday after a healthy bond sale in Portugal and signs of strength in the U.S. banking sector.

European shares rallied, led by banks, on hopes euro-zone finance ministers would beef up the region's rescue fund and after Portugal sold 1.25 billion euros ($1.62 billion) to strong demand. Lisbon's borrowing costs fell on the 10-year issue but rose in the five-year.

Portugal is clearly the biggest factor as the market's latest concern has been a revival of the sovereign debt issue in Europe, said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

Having (the latest auction) pass is taking some pressure off sellers.

U.S. bank shares will also be in focus after JPMorgan Chase & Co's Chief Executive Jamie Dimon said the lender could pay an annual dividend of 75 cents to a dollar once the Federal Reserve completes stress tests of the largest U.S. banks and gives its approval.

JPMorgan shares rose 1.2 percent premarket to $44.11.

The trend for bank stocks has been of significant improvement, said Meckler, adding JPMorgan's move is a sign lenders may have left behind their credit weakness.

Adding to the positive sentiment, Wells Fargo raised the U.S. bank sector to an overweight rating.

S&P 500 futures rose 6.7 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 59 points and Nasdaq 100 futures added 13 points.

Investors will eye U.S. data from the Labor Department as it releases import-export prices for December at 8:30 a.m. (1330 GMT). Economists in a Reuters survey forecast a 1.2 percent rise in import prices and a 0.7 percent increase in export prices. In November, import prices rose 1.3 percent and export prices rose 1.5 percent.

The Fed will release its Beige Book of regional economic conditions at 2 p.m..

Shares on Wall Street closed higher on Tuesday as energy shares helped the Dow and S&P 500 end a three-day losing streak, even as investors worried rising fuel costs will undercut economic growth.

American International Group Inc accepted a $2.16 billion cash offer for its Taiwan Nan Shan Life from a group led by local conglomerate Ruentex, after 15 months of trying to sell the unit.

No S&P 500 companies are expected to report results Wednesday. Later in the week, Intel Corp and JPMorgan Chase results could provide further evidence the economic recovery remains on track.

Alaska's main oil pipeline has been allowed to resume limited operations after a leak idled 12 percent of U.S. crude output. Crude prices were unchanged in early trading.

(Editing by Padraic Cassidy)