Wall Street set to open higher, helped by China market rally

(Reuters) - Wall Street was set to open higher on the first day of the month, helped by an almost five percent rally in Chinese stock markets and ahead of a string of domestic economic data.

Chinese stock markets rose strongly after last week's sell off and as data showed growth in the country's factory sector edged up in May but export demand shrank again, reinforcing the view of the need for more stimulus.

"It's the first day of the month and news out of China is bullish," said Andrew Barber, chief market strategist at Eagleview Capital in Delaware.

"The first day of the month tends to be bullish for stocks because a lot of investors dump losers before the end of the month and still have cash on hand."

Data showed U.S. consumer spending was unexpectedly flat in April as households cut back on purchases of automobiles and continued to boost savings, suggesting the economy was growing moderately early in the second quarter.

The data was the first of a number of economic pointers expected for the week, culminating with the job report on Friday, which investors will peruse for clues on the timing of a rate hike.

S&P 500 e-mini futures were up 5 points and their fair value ? a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract ? indicated a higher open.

Dow Jones industrial average e-mini futures <1YMc1> rose 63 points and Nasdaq 100 e-mini futures added 19.25 points.

Data later on Monday is expected to show construction spending rose in April, while the ISM's manufacturing index for May is expected to have increased to 52.0 from 51.5 in April. Both data sets are due at 10:00 a.m. ET.

Intel shares fell 1.1 percent at $34.07 in premarket trading after the company agreed to buy programmable-chip maker Altera for $16.7 billion. Altera rose 6 percent to $51.76.

OM Group jumped 27.9 percent to $33.95 after Apollo Global Management agreed to buy the magnet and battery maker for $1.03 billion.

Citigroup was up 1.1 percent at $54.70 on a Wall Street Journal report that the bank is expected to close its troubled Banamex USA unit. Goldman Sachs upgraded the stock to "buy" from "neutral".

Oncothyreon surged 28 percent, Immunogen jumped 23 percent, CTi BioPharma and VBL Therapeutics both rose 6 percent after the cancer drug makers presented positive data.

Molycorp fell 22.3 percent to $0.41 after the rare earth miner said it would delay a loan payment, which the Wall Street Journal said might lead to a bankruptcy filing.

(Editing by Savio D'Souza)

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