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Trader Eric Schumacher works on the floor of the New York Stock Exchange, in New York. (Richard Drew/AP)
Trader Eric Schumacher works on the floor of the New York Stock Exchange, in New York. (Richard Drew/AP)

Premarket: Futures flat, all eyes on Obama speech Add to ...

U.S. stock index futures were little changed in low volume on Tuesday, hovering near multi-year highs as traders look ahead to President Barack Obama’s State of the Union address.

The economy will be one of the main themes of Obama’s speech at 9 p.m. (ET) on Tuesday. Any clues on a deal to avert automatic spending cuts due to take effect March 1 will be key for markets.

Equities were mostly flat on Monday but the trend on the S&P 500, off from six weeks of gains, continues to be higher. The index is up 6.4 per cent so far this year.

S&P 500 futures fell less than a point 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 futures rose 1 points, and Nasdaq 100 futures edged up half a point.

Quarterly results are expected from companies including McGraw-Hill, Marsh & McLennan and Reynolds American.

In Europe, a pledge by the world’s most powerful economies to avoid a global currency war lifted investors’ spirits, pushing stocks and the euro higher.

The G-7 nations, which include the U.S., Japan and Germany, said their economic policies should be “oriented towards meeting domestic objectives and not towards setting specific exchange rates.” That was meant to ease concerns that major economies were retooling their monetary policies to weaken their national currencies to help domestic exporters.

Such worries began after Japan in December announced a new ultra-loose monetary policy that caused a sharp drop in the yen against other major currencies. With all major economies struggling to recover from the financial crisis, that raised the spectre of a global race among governments to loosen monetary policies and weaken national currencies.

After the statement’s release, the euro made up early losses to trade 0.4 per cent higher on the day at $1.3453 (U.S.).

Germany’s DAX stock index rose 0.2 per cent to 7,650.77 while France’s CAC 40 gained 0.5 per cent to 3,667.38. Britain’s FTSE 100 was up 0.4 per cent at 6,300.12. Tokyo’s Nikkei 225, which closed before the G-7 statement was released, rallied 1.9 per cent on the continued weakness of the yen.

Gold clawed back from its lowest in over a month on Tuesday, finding respite from a broadly falling dollar after the G-7 statement.

Earlier, gold hit a trough of $1,638.82 an ounce, its lowest since January 4. It stood at $1,646.76 by 1120 GMT, flat on the day. U.S. gold futures for April delivery fell 0.1 percent to $1,646.80 an ounce.

Markets in mainland China, Hong Kong, Singapore, Malaysia and Taiwan were closed for Lunar New Year holidays.

India’s industrial production unexpectedly shrank for a second straight month in December, weighed down by weak investment and consumer demand, casting doubt on the view that Asia’s-third largest economy is showing signs of recovery.

Benchmark oil for March delivery was down 24 cents to $96.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.31 to finish at $97.03 a barrel in New York on Monday as the euro strengthened against the dollar.

Three-month copper rose 0.2 per cent to $8,213 per tonne from a last bid of $8,199 on Monday.

– With files from the Associated Press.

Inside the Market editor Darcy Keith is away and will return next week.

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