* Netflix blames Amazon for outage
* Obama heads back to Washington after vacation
* Futures up: Dow 17 pts, S&P 3 pts, Nasdaq 3.25 pts
By Chuck Mikolajczak
NEW YORK, Dec 26 (Reuters) - U.S. stock index futures edged higher on Wednesday, indicating the S&P 500 may stem its worst two-day drop since mid-November, ahead of the resumption of "fiscal cliff" negotiations.
U.S. President Barack Obama is cutting short his Hawaiian holiday to leave for Washington on Wednesday to address the unfinished negotiations with Congress.
Obama is due to arrive in Washington on Thursday to resume talks on the cliff, a sharp rise in taxes and deep spending cuts due to begin on Jan. 1 that could tip the U.S. economy into recession.
"This is what we've come to - the President might get on a plane today and this is what the markets might react to," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
"It's all about the fiscal cliff."
A Republican plan that failed to gain traction last week triggered the recent decline in the S&P 500, highlighting market sensitivity to headlines centered around the talks.
Investors will also look to housing data for signs of improvement in that sector of the economy, with the S&P Case/Shiller Home Price Index for October expected at 9 a.m. (1400 GMT).
Housing data has shown modest improvement in recent months, and continued strength could help support the sagging economy.
"The data is two months old, so it's interesting, but I don't know that people will react to it given these other more timely events," said Forrest.
S&P 500 futures rose 3 points and were slightly 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 17 points, and Nasdaq 100 futures climbed 3.25 points.
The benchmark S&P index is up 13.4 percent for the year, and has recouped nearly all of the losses suffered in the wake of the U.S. elections, when the fiscal cliff concerns moved to the forefront of investors' focus.
China's Sinopec Group and ConocoPhillips will research potentially vast reserves of shale gas in southwestern China over the next two years, state news agency Xinhua reported.
An outage at one of Amazon.com Inc's web service centers hit users of Netflix Inc's streaming video service on Christmas Eve and was not fully resolved until Christmas Day, a spokesman for the movie rental company said on Tuesday.
In Asian markets, the Nikkei moved to a new nine-month high but shares elsewhere in the region were capped in thin holiday trade, with investors focusing on the fate of U.S. negotiations to avert a budget crunch looming at the end of the year.