Futures gain after CIT reaches deal

NEW YORK (Reuters) - Stock index futures rose on Monday after CIT Group Inc clinched a deal that could help it avoid bankruptcy, removing some uncertainty as the financial sector recovers from a deep crisis.

CIT shares rose 85 percent to $1.30 after the retail and small business lender reached a deal late Sunday to receive $3 billion in rescue financing from a group of bondholders, a source close to the situation said.

"CIT reaching an agreement is cheering the market," said Peter Cardillo, chief market economist at Avalon Partners in New York. "There was no help from the government and that in itself is positive."

S&P 500 futures were 6.7 points higher 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 55 points, and Nasdaq 100 futures gained 7.5 points.

Despite warning there is still a significant risk of a "double-dip" recession, Goldman Sachs Group Inc raised its year-end target for the benchmark S&P 500 index <.SPX> to 1,060 from 940 -- an upward move of almost 13 percent.

Adding to the positive tone, White House Budget Director Peter Orszag said Sunday that second-quarter U.S. gross domestic product data is likely to be better than first-quarter levels, indicating improvement in the economy.

In company news, shares of Human Genome Sciences Inc nearly quadrupled before the bell after the biotechnology company said its experimental drug to treat lupus was successful in a late-stage clinical trial.

Conference Board leading indicators data is expected at 10 a.m. EST and is likely to show the U.S. economy is nearing the end of recession.

Companies reporting quarterly scorecards on Monday include Texas Instruments Inc and Legg Mason Inc .

Crude futures rose 1.5 percent, extending a 2.5 percent rally on Friday, bolstered by a fall in the U.S. dollar on hopes of a global economic recovery.

U.S. stocks closed out their best week in four months on Friday on a flat note as strong earnings from IBM softened the blow of disappointing results from General Electric Co .

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

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