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Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange Aug. 12, 2014. (JOACHIM HERRMANN/REUTERS)
Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange Aug. 12, 2014. (JOACHIM HERRMANN/REUTERS)

Premarket: Futures edge up, S&P may have 3rd day of gains Add to ...

U.S. stock index futures were higher on Tuesday, indicating a potential third straight day of gains as investors continued to bet that tensions in Ukraine would not escalate dramatically.

Equities have come under pressure because of the problems between Russia and Ukraine, with the S&P 500 at one point down about 4 percent from a record closing high in late July. The benchmark has recovered some of the decline but remained more than 2.5 percent below its record, suggesting traders may see bargains in the market.

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The gain implied by futures came despite ongoing concerns about the region, with Ukraine reporting that Russia had massed 45,000 troops on its border. Russia said a convoy of 280 trucks carrying humanitarian aid had set off for Ukraine, and Western governments warnings against using help as a pretext for an invasion.

Investors remained concerned about the fallout from any escalation in tensions. In Germany, geopolitical anxiety hit economic sentiment in August, the ZEW think tank said, with investor morale dropping to its lowest since December 2012. Market participants monitored other areas of unrest, including the recent violence in the Gaza Strip and Israel and U.S. air strikes in Iraq.

S&P 500 e-mini futures rose 4 points and were below 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 e-mini futures added 27 points, and Nasdaq 100 e-mini futures rose 9.25 points.

ReneSola Ltd was one of the New York Stock Exchange’s biggest premarket movers, jumping 6.7 percent to $3.03 after it reported a second-quarter swing to profit on lower costs.

Consumer Reports magazine said Tesla Motors Inc.’s Model S sedan had “more than its share of problems” a year after giving the car top marks. Shares were little changed premarket.

Hedge fund ValueAct Capital LLC said it had taken a $1-billion stake in Rupert Murdoch-controlled Twenty-First Century Fox Inc, the film and TV company. ValueAct’s chief executive officer told Reuters he supported the independent business plan of Valeant Pharmaceuticals International Inc. and that he doesn’t believe it has to buy Allergan Inc. ValueAct is a top Valeant shareholder.

European shares fell and the euro dipped towards nine-month lows against the dollar as reports a Russian aid convoy was heading to Ukraine ratcheted up tension between Kiev and Moscow.

Germany’s ZEW indicator of confidence among professional investment analysts sagged to a 20-month low in August. The ZEW institute said Tuesday its index fell to 8.6 from 27.1. Market observers had expected a fall to only 17.0.

“We are looking for a hard drop in the index as geopolitics is taking a toll. This comes before second-quarter GDP data on Thursday and this may form a picture that there are cracks in the euro zone recovery,” said Commerzbank strategist Rainer Guntermann.

The FTSEurofirst 300 index fell 0.2 per cent at 1,320.14 points, giving up a 1.3-per-cent gain on Monday.

The euro was down 0.2 per cent at $1.3366 (U.S.), heading towards nine-month lows hit last week.

“If the ZEW collapses, concerns about Russia will become more intense,” said Lutz Karpowitz, currency strategist at Commerzbank.

“That means the euro will not merely suffer as a result of a lack of momentum from other data today, but in the long run it will simply become more difficult for the euro if the European economy is unable to take off.”

Russian shares traded mixed after strong gains on Monday. The dollar-denominated RTS index was flat while the rouble-based MICEX rose 0.5 per cent. The rouble was 0.41 per cent weaker against the dollar at 36.07.

Moscow said a convoy of 280 trucks carrying humanitarian aid set off for Ukraine, a day after the head of NATO warned against using offers of help as a pretext for invasion.

Investors are also concerned about events in Iraq, where the president named a new prime minister on Monday to replace Nuri al-Maliki and the United States has bombed Islamic State insurgents who have marched through the north and the west of the country since June.

However, the price of oil fell on Tuesday, with Brent dropping more than $1 to below $104 a barrel. The political crisis has brought militia and special forces on to the streets of Baghdad, but it was not expected to disrupt crude supplies.

Things had looked brighter in Asia.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent after Monday’s 1.5 per cent jump. In Tokyo, the Nikkei stock index firmed 0.2 per cent.

The dollar edged higher against other major currencies, helped by a slight rise in U.S. Treasury yields, though the geopolitical tensions that have dominated financial markets in recent weeks were expected to restrict gains.

The U.S. currency edged up 0.1 per cent to 102.25 yen, having hit a two-week low of 101.51 yen on Friday.

U.S. 10-year Treasury notes yielded 2.43 per cent, up a shade from New York closing levels.

Yields on German government bonds, the euro zone benchmark, were about flat at 1.068 per cent. German yields touched a series of record lows in recent days as investors sought assets perceived as safe havens, before rebounding on Monday.

Gold held steady at about $1,308 an ounce. Analysts said geopolitics would be the metal’s most important driver.

With files from the Associated Press

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