U.S. futures point higher after holiday break; Dow Jones up 0.2%

Investing.com - U.S. stock futures pointed to a modestly higher open on Tuesday, as sentiment was boosted amid indications of improved merger-and-acquisition activity.

However, gains were limited amid concerns over big spending cuts set to take effect in less than two weeks unless U.S lawmakers take action.

Ahead of the open, the Dow Jones Industrial Average futures pointed to a 0.2% gain, S&P 500 futures signaled a 0.25% advance, while the Nasdaq 100 futures indicated a 0.2% rise.

U.S. markets were closed Monday for the Presidents Day holiday.

Market sentiment was supported by hopes of a pickup in merger activity. Shares in office-supplies retailer Office Depot soared 11.1% in pre-market trade after the Wall Street Journal reported the company was in advanced talks with OfficeMax regarding a merger.

OfficeMax saw shares rally 13.5% on the news.

Meanwhile, shares in General Mills were likely to be active after the food giant affirmed its estimates of adjusted earnings for fiscal 2013 and said it expected higher profit as well as higher returns of capital to shareholders in fiscal 2014.

Other stocks in focus included, nutritional-products maker Herbalife, which was due to report fourth-quarter earnings after Tuesday’s closing bell.

Personal computer maker Dell was also scheduled to post earnings results after the closing bell.

Across the Atlantic, European stock markets were broadly higher after a report showed that the ZEW index of German economic sentiment hit a 34-month high in February.

The EURO STOXX 50 climbed 1.2%, France’s CAC 40 rallied 1.35%, Germany's DAX rose 1.1%, while Britain's FTSE 100 added 0.45%.

The ZEW Centre for Economic Research said that its index of German economic sentiment jumped to 48.2 in February, the highest since April 2010, from 31.2 in January, against expectations for a reading of 35.0.

Sentiment in the wider euro zone also hit a 34-month high in February, with the index of euro zone economic sentiment rising to 42.4 from 31.2 in January, better than forecasts for a reading of 35.5.

During the Asian trading session, Hong Kong's Hang Seng Index fell 1%, while Japan’s Nikkei 225 Index dipped 0.3% as the yen halted its slide against the U.S. dollar.

Later in the day, the National Association of Home Builders was to release its Housing Market Index.