Wall Street to rally at open as Ukraine-Russia tension eases

NEW YORK (Reuters) - U.S. stocks were set to open sharply higher on Tuesday after Russian President Vladimir Putin ordered troops involved in a military exercise near the Russian border with Ukraine back to their bases, easing fears of a possible war in the region.

Putin said there was no need to use military force in the Crimea region of Ukraine for now, a day after Russian stocks, bonds and currency were hammered as a result of Moscow's military move on the peninsula.

"This is a done deal; if it was escalating, it would have by now," said Doug Cote, chief market strategist, ING U.S. Investment Management in New York.

In the absence of a grave crisis, geopolitical risks tend to be short lived as leaders succumb to market forces, he said.

"The market is back to fundamentals. Earnings have been fabulous for the fourth quarter. This market is going up because fundamentals are positive."

The geopolitical tension triggered a run for investment safety on Monday, with gold, the U.S. dollar and Treasuries prices up and stocks around the world lower. The move was partly reversing on Tuesday.

S&P 500 e-mini futures rose 19 points and were above 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 166 points and Nasdaq 100 futures added 38 points.

The sharp gains in futures indicated the S&P 500 would be trading near record high levels. The turbulent situation in Ukraine set the ground for volatile trading ahead.

Shares of RadioShack Corp tumbled 23 percent in premarket trading after the struggling retailer said it would close up to 1,100 stores in the United States after a huge drop in sales over the holidays.

Dish Network and Walt Disney Co reached a long-term deal, allowing the No.2 satellite TV provider to carry Disney-owned networks such as ABC and ESPN, and deliver the content outside of a traditional TV subscription. Disney shares rose 1.1 percent in light premarket trading.

(Editing by Bernadette Baum)

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