* Fed likely to show it ready to act
* China PMI hits eight-month low
* Futures up: Dow 42 pts, S&P 3.9 pts, Nasdaq 11 pts
By Chuck Mikolajczak
NEW YORK, Aug 1 (Reuters) - U.S. stock index futures advanced on Wednesday after two straight sessions of declines and ahead of the Federal Reserve's statement on the economy and a possible new round of stimulus.
The Federal Reserve is likely to show it is ready to act to support a weakening U.S. economy but stop short of aggressive measures for now.
The Fed statement comes a day before a key meeting of the European Central Bank, after its president, Mario Draghi, heightened speculation of further ECB purchases of Italian and Spanish bonds by saying that he would do "whatever it takes to preserve the euro."
The S&P 500 posted its biggest two-day percentage gain to close out last week on increased expectations both the Fed and the European Central Bank will plan further actions to stimulate their respective economies at the meetings this week, but the index has stalled the last two sessions as it reached levels not seen since early May.
"The first day of the new month the markets will be faced with a lot of economic news, earnings, and of course the key focus of the day will be the Fed's announcement," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"The real focus remains around Europe and whatever Europe does on Thursday or indicates it is going to do will either make this market propel to much higher levels or just stay within the trading range."
Automatic Data Processing releases its July employment report at 8:15 a.m. (1215 GMT). Economists in a Reuters survey expect 120,000 jobs were created in July versus 176,000 in June.
At 10 a.m., the Commerce Department releases June construction spending and the Institute for Supply Management releases its July manufacturing index. Economists in a Reuters survey forecast construction spending to rise 0.4 percent and a 50.2 ISM reading.
China's official factory purchasing managers' index edged down to an eight-month low of 50.1 in July from 50.2 in June, suggesting the sector is barely growing, while a rival HSBC survey indicated the more market-sensitive private sector is starting to recover.
S&P 500 futures rose 3.9 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 gained 42 points, and Nasdaq 100 futures added 11 points.
Equities closed out the month of July with the Dow up 1 percent, the S&P 500 up 1.3 percent and the Nasdaq adding 0.2 percent. After seven months, the S&P 500 has gained nearly 10 percent for the year, despite a slowing world economy.
Mastercard shares dipped 1.1 percent to $431.74 in premarket trade after the world's second-largest credit and debit card processing network posted second-quarter earnings.
Other major companies announcing results include Metlife , Prudential Financial Inc and Tesoro Corp .
According to Thomson Reuters data through Tuesday morning, of the 321 companies in the S&P 500 that have reported second-quarter earnings to date, 67.3 percent have reported earnings above analysts' expectations. Over the past four quarters, the average beat rate is 68 percent.
European stocks rose early on Wednesday, helped by a string of better-than-feared corporate results ahead of policy decisions by the Fed and the ECB which some expect to result in bold action to support their economies. The FTSEurofirst 300 index of top European shares was up 0.2 percent.
Asian shares fell on Wednesday as soft Chinese manufacturing data further undermined investor confidence and as hopes faded for bold stimulus action this week by the Fed and the ECB to underpin faltering economies.