U.S. MARKET AVERAGES

U.S. stock futures traded comfortably above the flat line, pointing to a positive opening on crude oil prices decline below $67 a barrel and optimism abouth earnings and merger activity.

Stocks have significantly recovered since the heavy selloff last week, moving back to the upside with a slightly higher close on Monday and modest gains Tuesday on the back of solid earnings from blue-chip companies like United Technologies and McDonald's as well as lower oil prices.

On Wednesday earnings season will continue at full speed including reports from oil producer ConocoPhillipsOil, Kerr-McGee Corp,Amerada Hess and General Dynamics.

Bristol-Myers, BellSouth, Abbott Labs, Xerox, Hershey and QUALCOMM are among the other noteworthy companies set to release their results.

Energy and health care sectors are expected to see the biggest gains in earnings among the S&P 500 companies, while basic materials and telecommunications are seen as losing sectors.

Standard & Poor''s 500 index futures were up 3.50 points, slightly above fair value. Nasdaq 100 index futures were up 4.50 points, and Dow Jones industrial average futures were up 27 points.

In economic news, the National Association of Realtors will release existing home sales for December at 10 a.m. Economists forecast a median 6.90 million annualized units total compared with 6.97 million in the previous month.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished in the positive ahead of the Chinese Lunar New Year holiday with easing oil prices and institutional share buying. The leading gainers were South Korea’s Kospi, rising 1.2% and Taiwan’s Weighted index, up 1.2%. Shanghai Composite advanced 0.5% on better-than-expected economic data and institutional buying of large-capitalized stocks. The Nikkei finished flat at 0.01%. Hong Kong’s Hang Seng was the only decliner, down 0.07%.

European stocks rebounded from yesterday’s declines, supported by higher close of U.S. markets, upbeat outlook from software company SAP and multi-year high for German business sentiment. The German DAX 30 climbed 0.7%, the French CAC 40 advanced 0.6%, and London’s FTSE 100 rose 0.8%.

OIL, METALS, CURRENCIES

Crude oil prices fell below $67 on mild winter weather in the U.S. and expectations of fuel inventories increase. Light sweet crude for March delivery fell 50 cents to $66.56 a barrel. Heating oil lost 1 cent to $1.8050 a gallon. Gasoline declined 2 cents to $1.7255. Natural gas gained 2 cents to $8.705 per 1,000 cubic feet. London Brent declined 46 cents to $64.88.

European gold continued its upward march on strong demand from consuming industries and retailers. In London gold traded at $562.25, up from $556.50. In Zurich the precious metal traded at $561.85, up from $556.15. In Hong Kong gold dropped $5.20 to close at $551.20. Silver opened at $9.24, up from $9.13.

The U.S. dollar traded mixed against other major currencies. The euro was quoted at $1.2296, up from $1.2288. The dollar bought 114.82 yen, up from 114.59. The British pound stood at $1.7883, up from $1.7864.

EARNINGS NEWS

BellSouth, (BLS), local phone company, reported that Q4 net income dropped to 34 cents a share down from 74 cents a share in the year-ago period, as the company incurred large hurricane-related costs. Adjusted for onetime items and other special factors, the company recorded income of 53 cents a share, up from 39 cents in the year-ago period. Analysts expected the company to earn 45 cents a share. Revenue advanced 1.9% to $5.24 billion from a year ago, excluding the company's wireless business. Cingular Wireless, the company's venture with AT&T Inc., added a net 1.8 million wireless subscribers. BellSouth owns a 40% stake. Including Cingular's share of revenue, the company saw a 9.2% increase in sales to $8.66 billion.

Bristol-Myers Squibb Co, (BMY), healthcare related products manufacturer, reported Q4 income of 26 cents a share, up from 7 cents a share in the year-ago period. If not for items, on a non-GAAP basis, the company earned 31 cents a share, down from 39 cents a share a year earlier. Q4 net sales from continuing operations were $5 billion, down 1%, excluding a 2% unfavorable foreign exchange impact. Analysts were anticipating earnings of 28 cents a share.

First Midwest Bancorp Inc, (FMBI), reported Q4 net income of 49 cents a share, down from 54 cents a share in the same period the previous year. If not for special items, the company would have earned 59 cents a share, up from 50 cents a share the prior year. Analysts had been expecting earnings of 51 cents a share. This estimate takes into account a decrease of 4 cents a share for the expensing of stock options, offset in part by an increase of 3 cents resulting from First Midwest's Bank Calumet acquisition.

Lear Corporation, (LEA), automotive interior systems suppliers, reported Q4 net loss of $8.88 per share, including impairments, restructuring and other special charges, down from a net income of $1.70 per share in the year-ago period. Operating performance went down, reflecting the adverse platform mix in North America, higher raw material and energy prices, as well as continuing cost pressures throughout the entire supply chain.