U.S. stock indexes were set to rise more than 1 percent at the open on Monday as investors welcomed AT&T's proposal to buy T-Mobile from Deutsche Telekom, a deal that would create the largest mobile operator in the United States.

Glimmers of hope about Japan's nuclear crisis and investor Warren Buffett's comments about a buying opportunity for Japanese stocks also boosted investor sentiment.

A&T Inc said it would pay $39 billion for Deutsche Telekom AG's T-Mobile USA, sparking a sharp rally in European telecom shares.

AT&T shares were up 5.4 percent at $29.45 in premarket trade. In European market, Deutsche Telecom rose 13.7 percent and Vodafone Plc was up 4.2 percent.

But competitor Sprint Nextel Corp shares were down 13 percent to $4.39 before the bell.

A deal of this size is certainly a big plus to the telecom sector and the overall market. This will spur more M&A, said Larry Peruzzi, senior equity trader at Cabera capital Markets Inc in Boston. He said the deal is one of the biggest since the financial crisis.

Investors kept a close eye on events in Japan, where power cables have been connected to all six nuclear reactors at the Fukushima Daiichi power plant damaged by an earthquake and tsunami. The World Health Organization said radiation found in food from the area near the damaged nuclear plant was a serious situation.

The market also closely followed Libya, where Western powers launched a second wave of air strikes early Monday after halting the advance of Muammar Gaddafi's forces on Benghazi and targeting air defenses in the country.

Brent crude oil futures for May jumped $1.72 to $115.59 a barrel.

Warren Buffett said Japan's devastating earthquake is the kind of extraordinary event that creates a buying opportunity for shares in Japanese companies. He spoke during a visit to a South Korean factory run by a company owned by one of his funds.

S&P 500 futures rose 16.60 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 120 points, and Nasdaq 100 futures put on 26.75 points.

European stocks <.FTEU3> were up 1.7 percent on Monday. Japanese markets were closed for a holiday.

Data on U.S. existing home sales is due at 10:00 a.m. Economists in a Reuters survey predict a rate of 5.15 million annual units for February, down from 5.36 million in the previous month.

U.S. stocks gained Friday after a week of volatility, but investors were reluctant to make big bets because of the turmoil in the Middle East and Japan's nuclear crisis.

(Editing by Padraic Cassidy)

Japan Libya Warren buffett T-mobile