Stock index futures were sharply higher on Monday, building on last month's solid gains, as investors focused on encouraging corporate results.

Wall Street wrapped up its best month in a year on Friday, with the major indexes each posting 7 percent increases for July as markets bounced back from a sell-off through May and June.

Strong results in Europe from big banks BNP Paribas SA and HSBC Plc heartened investors on Monday. Optimism over earnings season has offset signs the pace of the economic recovery is slowing of late, though there have been concerns that revenue growth has not been strong enough.

Shares of Coca-Cola Co rose 1.2 percent to $55.78 in light premarket trade after Barron's business weekly reported over the weekend the soft drink maker's shares could rise 10 percent or more in the next year. As well, JPMorgan upgraded Coke to overweight from neutral and raised its price target to $66 from $62.

On the economic front, manufacturing in China shrank in July for the first time since March 2009, while it perked up in the euro zone. Markets appeared to take the Chinese data as a signal of a desired slowdown rather than an indication of a slump.

Domestic data on tap later in the morning includes ISM manufacturing for July and construction spending for June, both due at 10 a.m. EDT. The ISM reading is expected to come in at 54.1, compared with 56.2 the month before, while construction spending is seen falling 0.5 percent versus a decline of 0.2 the previous month, according to a Reuters poll.

S&P 500 futures gained 13.1 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 jumped 105 points, and Nasdaq 100 futures rose 19.75 points.

BP Plc could start plugging its broken deep sea oil well in the Gulf of Mexico on Monday night, more than three months after its rupture led to the worst offshore oil spill in U.S. history.

Energy shares could get a lift as oil hit a 12-week high near $80 a barrel on optimism over the strength of the recovery and the outlook for energy demand.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

China