Wall Street set to open up on benign inflation data : US Business

By Kristina Cooke

NEW YORK (Reuters) - Stock futures pointed to a slightly higher open on Friday after benign inflation data, and financial shares were set to rebound from Thursday's steep losses after a broker upgraded Lehman Brothers.

Futures were well off their highs, however, on concerns about consumer spending after department store operator JC Penney Co Inc cut its first-quarter earnings outlook following weak Easter sales. JC Penney shares fell more than 11 percent before the bell.

U.S. personal income rose more than expected in February as the economy teetered on the brink of a recession, while both personal spending and a key price measure increased only slightly, a government report showed.

"Futures gained a nice pop from economic data released an hour before the opening bell but a dour earnings outlook from J.C. Penney sent a chill through markets," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

S&P 500 futures were up 4.90 points, above fair value, a formula to evaluate pricing taking into account interest rates, dividends and time to expiration on contract. Dow Jones futures were up 44 points, while Nasdaq futures rose 6.0 points.

Financial shares rose before the bell after Citigroup recommended that clients buy Lehman Brothers' stock. Shares in the investment bank were up 6.7 percent at $41.30.

On Thursday, Lehman fell 8.9 percent on speculation it might suffer a fate similar to the near-collapse of Bear Stearns . Lehman called the rumors "totally unfounded."

Shares of Morgan Stanley and Goldman Sachs also rose before the bell.

U.S. stocks fell for a second day on Thursday as soft results from technology bellwether Oracle Corp fed worry about cuts in business spending, while bank shares fell on fears of another major casualty in the sector.

(Additional reporting by Herb Lash, editing by James Dalgleish)

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