US STOCKS-Futures fade as enthusiasm over Greek vote wanes

Last Updated: Mon, Jun 18, 2012 12:00 hrs

* Greek elections support pro-bailout parties

* Spanish, Italian bond yields rise

* Petsmart ups dividend, sets new buyback

* Futures off: Dow 34 pts, S&P 3.3 pts, Nasdaq 0.25 pt

By Chuck Mikolajczak

NEW YORK, June 18 (Reuters) - U.S. stock index futures slipped on Monday as initial enthusiasm for a victory for pro-bailout parties in Greek elections was overshadowed by rising Spanish and Italian bond yields.

Futures had advanced earlier on news Greece's center-right New Democracy party will try to form a coalition with other parties and Germany indicated it may be willing to grant the fiscally troubled nation more time to meet fiscal targets needed to avoid a euro exit.

But the election results offered little reprieve from contagion concerns as yields on both Italian and Spanish bonds rose, with Spain's 10-year bond yield climbing above the 7 percent level viewed as unsustainable by many analysts.

The rising yields prompted Spain's treasury minister to urge the European Central Bank to make a firm response to market pressures.

"It's looking more and more like plugging the dam," said Andre Bakhos, director of market analytics at Lek Securities in New York. "We may have the backing of Greece to stay in the euro zone, but that is only one aspect and as the short-term euphoria wears off investors realize the problem hasn't gone away."

Banking shares, seen as particularly sensitive to euro zone troubles, edged lower. Bank of America Corp was off 0.6 percent to $7.85 and Citigroup Inc was down 0.3 percent at $28.22 in premarket trade.

European shares erased early gains and briefly turned negative before stabilizing, with the FTSEurofirst 300 index up 0.3 percent.

S&P 500 futures fell 3.3 points and were slightly below 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 dipped 34 points, and Nasdaq 100 futures lost 0.25 point.

Microsoft Corp is close to buying business software company Yammer Inc for more than $1 billion, according to a source familiar with the details. Shares gained 0.3 percent to $30.10 in premarket.

Petsmart Inc said it has increased its quarterly dividend to 16.5 cents a share and authorized a new $525 million share buyback plan.

DSW Inc plunged 13.3 percent to $51 in light premarket trade after the footwear retailer said that it was maintaining its full-year 2012 guidance of $3.25 to $3.40 per share, excluding items. The current Thomson Reuters estimate is for $3.37 per share.

The economic calendar is light, with the National Association of Home Builders/Wells Fargo June housing market index due at 10 a.m. (1400 GMT).

Asian shares rose more than 1.5 percent on the Greek election results.

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