* Fitch cuts Italy credit rating after election impasse
* China data show uneven economic recovery, policy dilemma
* S&P 500 less than 1 pct away from all-time closing high
* Futures: S&P off 3.5 pts; Dow off 18 pts, Nasdaq off 6.5 pts
By Angela Moon
NEW YORK, March 11 (Reuters) - U.S. stock index futures edged lower on Monday following last week's rally to record highs for the Dow as a credit downgrade of Italy and disappointing data from China curbed investors' enthusiasm.
The S&P 500 climbed for a sixth straight day on Friday and ended nine of the past 10 weeks higher. All three major U.S. stock indexes racked up the biggest weekly gains since the first week of the year.
European shares dipped on Monday as investors digested Italy's downgrade by Fitch on account of political stalemate.
China's uneven economic recovery signals a looming dilemma for policymakers as official data over the weekend showed inflation at a 10-month high in February while factory output and consumer spending were weaker than forecast.
But analysts said stocks still had momentum to rise, with the S&P 500 now less than 1 percent away from its all-time closing high.
"The market may advance more slowly that in previous weeks, but there are numerous bullish signs, including the fact that hedge funds continue to buy into the market," said Todd Salamone, director of research at Schaeffer's Investment Research.
S&P 500 futures fell 3.5 points and were 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 fell 18 points, and Nasdaq 100 futures lost 6.5 points.
Deals will remain at the forefront of investors minds, with the Times of India newspaper reporting that AT&T Inc is considering buying a 25 percent stake in India's Reliance Jio Infocomm Ltd, a telecommunications venture controlled by billionaire Mukesh Ambani, for $3.5 billion. AT&T shares were down 0.5 percent in premarket trading.
Merck & Co will be in the spotlight after data released on Saturday showed unexpected serious side effects in niacin, a heart drug aimed at raising good HDL cholesterol.
Wall Street commodity revenues crashed last year to their lowest on record, as tighter regulation and limited price swings squeezed the once dominant traders of Goldman Sachs Group Inc , JPMorgan Chase & Co and Morgan Stanley.
U.S. stocks closed out a historic week with another day of gains on Friday, as the Dow hit yet another record closing high on a payrolls report that surpassed even the most optimistic forecasts.