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U.S. Stock Futures Rise Amid Deals Activity, Citigroup Earnings

July 14 (Bloomberg) -- U.S. stock futures advanced, after the Standard & Poor’s 500 Index posted its biggest weekly loss in three months, on an increase in takeover activity and better- than-forecast earnings from Citigroup Inc.

Citigroup climbed 3.8 percent after also agreeing to pay $7 billion to settle a mortgage-bond probe. Apple Inc. rose after Barclays Plc advised investors to buy shares in the world’s biggest company by market value. URS Corp. jumped 7.7 percent after Aecom Technology Corp. agreed to acquire the construction- management company for about $4 billion. AbbVie Inc. fell 2.1 percent after Shire Plc said it’s willing to recommend the U.S. company’s latest bid to its shareholders.

Futures on the S&P 500 expiring in September added 0.4 percent to 1,970.70 at 8:22 a.m. in New York. Dow Jones Industrial Average contracts increased 77 points, or 0.5 percent, to 16,958 today.

The S&P 500 slid 0.9 percent last week amid signs of financial stress at a Portuguese bank and speculation that the recent rally is overdone. The benchmark gauge closed at an all- time high and the Dow topped 17,000 for the first time on July 3. The S&P 500 hasn’t had a drop of 10 percent in more than two years and the gauge trades at a valuation of 18 times reported earnings, the highest since 2010.

Volatility Outlook

Options traders are betting equity volatility will increase. The Chicago Board Options Exchange Volatility Index jumped 17 percent last week and a similar measure for European equities surged the most in almost six months. The ratio of contracts wagering that the VIX will rise versus those betting on declines is almost 4-to-1, the highest since before the financial crisis in 2007, according to data compiled by Bloomberg.

JPMorgan Chase & Co., Goldman Sachs Group Inc., Yahoo! Inc. and Intel Corp. are among the 58 companies on the S&P 500 posting earnings this week. Profit by the gauge’s members increased 4.5 percent in the second quarter, and revenue rose 3.1 percent, according to estimates compiled by Bloomberg.

Citigroup jumped 3.8 percent to $48.78. The third-largest U.S. bank by assets agreed to pay $7 billion in fines and consumer relief to resolve government claims that it misled investors about the quality of mortgage-backed bonds sold before the 2008 financial crisis.

The bank said second-quarter profit tumbled 96 percent on $3.7 billion in costs tied to the settlement. Excluding items, profit was $1.24 a share. The average estimate of 25 analysts surveyed by Bloomberg was $1.05.

Apple Climbs

Apple climbed 0.6 percent to $95.83 after Barclays raised its recommendation on the technology company to overweight, or buy, from a rating similar to hold. Separately, Israeli media- services company Emblaze Ltd. said a jury considering its legal claim against Apple ruled the U.S. company didn’t infringe its patent.

URS advanced 7.7 percent to $56. Aecom will buy San Francisco-based URS by paying the equivalent of $56.31 a share in cash and stock, the companies said. Including debt, the value of the transaction will be about $6 billion. The price is 8.2 percent more than URS’s July 11 close.

AbbVie fell 2.1 percent to $53.83. Shire said it would recommend a bid from AbbVie of 53.20 pounds a share, subject to other terms under discussion being resolved. Shire shareholders would own about 25 percent of AbbVie under the latest proposal.

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