Stock index futures rebounded on Wednesday from three days of losses on stronger-than-expected growth in China, but investors closely watched developments in Europe's debt crisis.

Testimony from Federal Reserve Chairman Ben Bernanke will also be scrutinized for hints of new stimulus measures after June's dismal U.S. employment report.

Optimism about the health of the global economy gathered pace after data showed China's economy grew faster than expected in the second quarter, easing fears about a hard landing in the world's second-largest economy.

But Nicholas Colas, chief market strategist at the ConvergEx Group in New York, said optimism over China would be unlikely to sustain a rally in the face of mounting investor concerns over sovereign debt at home and abroad.

We are really focused on sovereign debt issues and those are still first and foremost, he said. Euro zone sovereign debt issues will soon be overtaken by the federal debt limit debate ... and that's not a positive for stocks either.

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 rose 51 points, and Nasdaq 100 futures added 14.50 points.

Investors remained cautious over developments in Europe. Moody's downgraded Ireland's debt to junk on Tuesday and said Ireland was likely to follow Greece in needing a second bailout. Irish bond yields jumped to record highs.

U.S. stocks closed lower for a third straight day on Tuesday as Europe's fiscal woes and a weak start to tech earnings gave investors little reason to buy.

Investors will be watching testimony from Ben Bernanke a day after minutes from a Fed meeting suggested the possibility of more stimulus measures. Bernanke is set to give a semiannual report on the economy and monetary policy to the House Financial Services Committee beginning at 10 a.m. (1400 GMT).

The inability of Washington to find a solution to U.S. debt issues is frustrating investors. President Barack Obama and top U.S. lawmakers fell short on Monday of finding enough spending cuts for a deal to avoid an August 2 debt default, and Republicans came under fresh pressure to agree to tax hikes.

Electronic Arts Inc , the video game publisher, is buying PopCap Games in a deal worth up to $1.3 billion as it tries to ramp up its social and casual games portfolio and better compete with Zynga Inc. The company's shares fell 2.8 percent to $23.50.

Netflix Inc hiked monthly prices for customers who use both its mail and online services, a move that could steer users toward its growing Internet streaming service.

In Europe, the FTSEurofirst 300 <.FTEU3> index of top shares were flat, with mining shares up along with metals prices on encouraging data from China. Japan's Nikkei <.NK225> rose 0.4 percent.

(Editing by Kenneth Barry)

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