U.S. stock index futures advanced on Monday following confirmation that Al Qaeda leader Osama bin Laden was killed by a U.S.-led operation in Pakistan.

The dollar edged higher while U.S. crude oil dropped 1.5 percent, reflecting a perception that geopolitical risks would ease after the death of the mastermind behind the September 11, 2001 attacks on the United States. Brent crude was down 1.6 percent.

Tensions in the Middle East and North Africa have served as market headwinds in recent months as unrest in oil-producing countries sparked concerns about the risk to supplies and the global economy.

This is a great story for freedom lovers, but it will only impact the economy insofar as it brings the price of oil down, said Christian Wagner, chief executive officer at Longview Capital Management in Wilmington, Delaware. Energy stocks could experience some pressure today, albeit on the back of some record earnings.

Wagner saw the lift as temporary, saying new geopolitical tensions could arise as factions take advantage of the new power vacuum in the terrorist network.

If earnings continue to do well then I wouldn't go so far as to say that we'll see a pullback in the coming days. But there will be increased concerns about the region contributing to market movement, he said.

The report on bin Laden came after the Dow and Nasdaq recorded their best month since December in April. Major U.S. indexes also hit new yearly highs last week on the back of strong corporate results.

Earnings season continued, with Humana Inc reporting a rise in first-quarter profit and sales, while conglomerate Loews Corp's earnings missed expectations.

S&P 500 futures rose 7.2 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 added 70 points, and Nasdaq 100 futures put on 11.5 points.

In deal news, Teva Pharmaceuticals Industries Ltd plans to buy Cephalon Inc for $6.8 billion, while Community Health Systems Inc raised its bid for Tenet Healthcare Corp by $1.75 per share to $7.25.

U.S.-listed shares of Teva rose 4 percent to $47.50 in premarket trading, while Cephalon gained 5.9 percent to $81.60. Tenet fell 4 percent to $6.65 before the bell.

Economic indicators on tap for Monday included March construction spending data and the Institute for Supply Management's April manufacturing report, which is seen dropping to 59.9 from 61.2 a month earlier. Both datapoints are due at 10:00 a.m. EST

Warren Buffett, the chairman of Berkshire Hathaway Inc still believes his reputation is intact despite a former top lieutenant buying shares in Lubrizol Corp before pitching a takeover of the chemicals company.

Speaking at Berkshire's annual meeting, Buffett remained bullish on the American economy and said it was not a credit risk.

In Europe, the pan-European FTSEurofirst 300 index <.FTEU3> edged higher, though volume was expected to be thin as Britain's markets were closed for a holiday. Japan's Nikkei stock average ended above the closely watched 10,000 mark for the first time since the March 11 earthquake and tsunami on optimism over U.S. gains following the death of bin Laden.

On Friday, U.S. stocks rose on strength from Caterpillar Inc and other industrials, though weakness in Microsoft Corp limited the Nasdaq's rise.

(Editing by Jeffrey Benkoe)