Wall Street futures point to higher open

LONDON (Reuters) - Stock futures for the Dow Jones industrial average, the S&P 500 and the Nasdaq 100 rise 0.3 to 0.5 percent, pointing to a higher start on Wall Street on Wednesday, after steep declines in the previous session on grim data.

The Mortgage Bankers Association releases at 1100 GMT (7 a.m. EDT) Weekly Mortgage Market Index for the week ended August 20, versus the prior week. The mortgage market index read 829.7 and the refinancing index was 4,676.7 in the previous week.

At 1230 GMT, Commerce Department releases July durable goods orders. Economists in a Reuters survey expect a rise in orders of 2.8 percent versus a drop of 1.2 percent in June.

American International Group Inc is expected to decide by early next week whether to enter formal negotiations with strategic investors for its Asian life insurance business, AIA, sources familiar with the process told Reuters on Wednesday.

Commerce Department releases at 1400 GMT new home sales data for July. Economists in a Reuters survey forecast a total of 330,000 annualized units in July, a repeat of the figure reported in June.

Telecoms equipment maker JDS Uniphase Corp is due to announce quarterly results.

Resource-related stocks will be in focus after crude oil bounced from a seven-week low as investors looked for relief in U.S. durable goods and oil inventory reports due later in the day, after fears of a double-dip recession intensified with dismal housing data.

European stocks erased early losses and inched higher on Wednesday, taking a breather after the previous session's sharp losses, with Heineken rising on forecast-beating results.

The Nikkei average <.N225> hit a 16-month closing low on Wednesday as disappointment spread over the lack of policy action by Japan to rein in the strong yen, which threatens a fragile economic recovery.

Japan's finance minister sharpened his rhetoric on the yen's steep gains after the Nikkei newspaper reported Japan may consider selling the yen in solo intervention if speculators drive it up, threatening the economy's recovery.

Finance Minister Yoshihiko Noda told reporters he would respond appropriately as needed, an expression he has not previously used in his campaign to talk the currency down. Noda was to meet Prime Minister Naoto Kan and other ministers later.

U.S. stocks fell to their lowest level in seven weeks on Tuesday as an unexpectedly large drop in home sales ratcheted up concerns that the economic recovery is even weaker than had been feared.

The Dow Jones industrial average <.DJI> fell 133.96 points, or 1.32 percent, to 10,040.45. The Standard & Poor's 500 Index <.SPX> shed 15.49 points, or 1.45 percent, to 1,051.87. The Nasdaq Composite Index <.IXIC> lost 35.87 points, or 1.66 percent, to 2,123.76.

There was "confusion" over the results of a key pressure test of the Macondo well hours before the Deepwater Horizon rig exploded in April, a senior rig official told federal investigators on Tuesday.

Standard & Poor's on Tuesday cut its ratings on Ireland and assigned the country a negative outlook, saying it expects Ireland faces substantially higher costs to support its ailing financial institutions.

S&P cut Ireland's long-term rating one step to AA-minus, the fourth highest investment grade. A negative outlook indicates another downgrade is more likely over the next one to two years.

(Reporting by Atul Prakash)