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U.S. Stock-Index Futures Advance Before Manufacturing Report

By Julie Cruz

May 3 (Bloomberg) -- U.S. stock-index futures rose, indicating the Standard & Poor’s 500 Index may rebound from the biggest weekly drop since January, before a report that will probably show manufacturing expanded at the fastest pace in almost six years.

Goldman Sachs Group Inc. rallied 1.7 percent in early trading in New York after billionaire Warren Buffett said the bank shouldn’t be blamed for losses sustained by clients who invested in mortgage bets. Pozen Inc. surged as the drugmaker won U.S. clearance to sell an arthritis drug that combines a painkiller with an ulcer medication. Mergers boosted stocks as United Airlines parent UAL Corp. and Continental Airlines Inc. agreed to combine and Buffett said he is looking for new deals.

Futures on the Standard & Poor’s 500 Index expiring in June rose 0.4 percent to 1,188.5 as of 7:55 a.m. in New York. Dow Jones Industrial Average futures gained 0.3 percent to 10,993 and Nasdaq-100 Index futures advanced 0.4 percent to 2,006.50.

“The manufacturing data this afternoon will show that the improvement of the U.S. economy is in good shape,” said Andreas Lipkow, an equity trader at MWB Fairtrade Wertpapierhandelsbank AG in Frankfurt. “Investors see that the U.S. is going towards a very good direction right now and they make the decision to invest more in the region as there is a currency risk in Europe.”

U.S. stocks fell on April 30, breaking the Dow Jones Industrial Average’s longest winning streak since 2004, after credit downgrades for Greece, Portugal and Spain spurred concern that global economic growth will slow and prosecutors considered filing fraud charges against Goldman Sachs Group Inc. European stocks fell today on concern a 110 billion-euro ($146 billion) rescue package for Greece will fail to contain the region’s debt crisis.

Manufacturing Growth

The Institute for Supply Management’s factory index rose to 60 last month, the highest level since July 2004, from 59.6, according to the median estimate in a Bloomberg News survey of 62 economists. Readings greater than 50 signal expansion. Another report may show personal spending rose in March by the most in five months.

About 83 percent of S&P 500 companies that have reported since April 12 have topped the average analyst estimate for net income, according to data compiled by Bloomberg.

Mortgage Bets

Goldman Sachs, Wall Street’s most profitable firm, rose 1.7 percent to $147.74 in early New York trading. Buffett, who invested $5 billion in the bank in 2008, praised Goldman Sachs Chief Executive Officer Lloyd Blankfein and said the company shouldn’t be blamed for losses suffered by clients who invested in mortgage bets at the center of a fraud lawsuit filed by regulators.

“He’s done a great job running that firm,” Buffett said in a Bloomberg Television interview before the annual shareholders meeting of his Berkshire Hathaway Inc. on May 1. “My choice would be to have Lloyd running it this year, next year and 10 years from now.”

Goldman Sachs is among the counterparties on derivative trades that contributed to a first-quarter loss at Buffett’s Berkshire Hathaway Inc., he said yesterday at a press conference in Omaha, Nebraska. Berkshire Hathaway shares were little changed in German trading.

Pozen surged 18 percent to $12.80 in early trading. The Food and Drug Administration approved the medicine, called Vimovo, for use in arthritis patients who are at risk of developing gastric ulcers, the agency said today in an e-mail.

Ulcer Medicine

The drug, developed with Pozen’s technology, combines the over-the-counter pain reliever naproxen with esomeprazole, the main ingredient in London-based AstraZeneca’s Nexium ulcer medicine. Vimovo may generate $500 million in sales in 2014, Gbola Amusa, an analyst at UBS AG in London, said yesterday in an e-mail.

UAL rose 2.4 percent to $22.11 in Germany, while Continental Airlines gained 1 percent to $22.58. The airlines said they see net annual synergies from their merger of $1 billion to $1.2 billion by 2013, “including between $800 million and $900 million of incremental annual revenues.”

Chevron Corp. rose 0.7 percent to 82.04 in German trading. Brent crude for June settlement rose 30 cents to $87.74 a barrel on the ICE Futures Europe exchange in London, after rising as much as 34 cents to $87.78 a barrel, the highest price since October 2008.

To contact the reporter on this story: Julie Cruz in Frankfurt at [e-mail];

Last Updated: May 3, 2010 07:57 EDT