* China February trade balance drops
* Zoll Medical to be acquired for $2.21 billion
* Futures off: Dow 1 pt, S&P 2 pts, Nasdaq 4.75 pts
By Chuck Mikolajczak
NEW YORK, March 12 (Reuters) - U.S. stock index futures edged lower on Monday as economic data in China gave investors reason to pause after a three-day rally.
China's trade balance plunged $31.5 billion into the red in February as imports swamped exports to leave the largest deficit in at least a decade and fuel doubts about the extent to which frail foreign demand or seasonal distortion drove the drop.
The data cast some doubt on global economic growth prospects after Friday's U.S. payrolls report pointed to an improving domestic economy and pushed equities to their fourth straight weekly gain.
Investors will also eye Tuesday's statement from the U.S. Federal Open Market Committee for any indications in the direction on monetary policy.
"With little fresh news to tip the scales either way, the market is looking for the next theme to take hold - the market is sitting right at a key resistance area looking for a push through what has been a significant hurdle," said Andre Bakhos, director of market analytics at Lek Securities in New York.
"The market has had a clear upside bias, and once this hurdle is surpassed there is the potential for a surge higher, perhaps to 1,440" for the S&P 500 index, Bakhos said.
China's central bank also said the country has ample room to tweak policy to support credit growth in the face of volatile foreign capital flows that will inevitably see market forces play a greater role in determining the value of the yuan currency.
S&P 500 futures fell 2 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 shed 1 point, and Nasdaq 100 futures lost 4.75 points.
Japan's Asahi Kasei Corp will buy U.S. medical equipment maker Zoll Medical Corp for $2.21 billion as Asahi Kasei looks to build a globally competitive healthcare business and reduce its reliance on its chemicals and fiber operations.
Molycorp Inc is set to buy Neo Material Technologies Inc in a C$1.3 billion ($1.31 billion) cash-and-share deal that will give Molycorp access to Neo's rare earth processing capabilities and patents.
Youku Inc dropped 10 percent to $22.50 in premarket after China's largest online video company said it will buy second-ranked Tudou Holdings Ltd in an all-stock deal valued at more than $1 billion. Tudou shares surged 117.8 percent to $33.52 in light premarket trade.
U.S. airline JetBlue Airways Corp has spoken to the management of Aer Lingus about the possible purchase of a stake in the Irish airline, the Irish Times newspaper reported on Monday, citing informed sources.
Swiss watchmaker Swatch Group SA said Tiffany & Co had served it with a 541.9 million franc ($590 million) counter-claim in a legal dispute with the U.S. jeweler over a severed cooperation agreement.
Federal prosecutors have nixed a tentative $1 billion settlement with Johnson & Johnson, holding out for a bigger settlement with the drugmaker for alleged improper marketing of its Risperdal schizophrenia drug, the Wall Street Journal said.
European stocks reversed early losses and turned slightly positive on Monday, reviving a three-session rally as investors shrugged off grim Italian economic growth data and the triggering of Greek credit default swaps to chase euro-zone banking stocks higher.
Asian shares fell as investors paused to assess the effect of strong U.S. jobs data, which scaled back expectations of more easing ahead of this week's Federal Reserve meeting, while uncertainty over Chinese growth also weighed on sentiment.