* U.S. housing starts rise, permits at 4-1/2 year high
* Cyprus aims to exempt small savers from deposit tax
* Futures: S&P up 3.5 pts; Dow up 20 pts; Nasdaq off 10.75
By Angela Moon
NEW YORK, March 19 (Reuters) - U.S. stock index futures rose
on Tuesday, helped by signs that the U.S. housing market
recovery is gathering pace, as investors shrugged off
developments in Cyprus that may lead the country into default.
Futures were initially lower ahead of a crucial vote in
Cyprus amid uncertainty over whether the nation's troubles would
have a wider impact in the euro zone. But the losses were soon
erased as buyers took the previous 2-day decline as an
opportunity to get back into the market.
Data showed groundbreaking to build new U.S. homes rose in
February and new permits for construction rose to their highest
level since 2008, a sign the nation's housing market recovery is
"The data was good but at the same time we need to think
about, now that the housing market is getting better, will the
Fed have to wait longer to get their foot off the gas pedal?"
said Joe Saluzzi, co-head of trading at Themis Trading.
"But the market certainly doesn't thinks so and it's also
shrugging off the Cyprus situation. It seems like the mentality
is 'don't you dare get in front of this rally.'"
S&P 500 futures added 3.5 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 added 20
points and Nasdaq 100 futures gained 10 points.
Cyprus's parliament was set to reject a divisive tax on bank
deposits in a vote scheduled for Tuesday, a government spokesman
said. The government has proposed to spare small savers from the
tax in a bid to win parliamentary backing for an international
bailout and avoid default and a banking collapse.
A weekend announcement that Cyprus would break with previous
practice and impose a levy on bank accounts as part of a 10
billion euro ($13 billion) EU bailout prompted some turmoil on
European financial markets on Monday.
Citigroup Inc agreed to pay $730 million to settle a
class action lawsuit on behalf of investors who said they were
misled by the company's disclosures. The stock was up 0.6
percent in premarket trade.
Drugmaker Affymax Inc said it was considering
selling itself or filing for bankruptcy among a range of
alternatives, as it struggles to stay afloat following the
recent recall of its sole commercial product, the anemia drug
Omontys. The stock plunged 57.5 percent to $1.23.
BlackRock Inc, the world's largest money manager,
will lay off nearly 300 employees, or about 3 percent of its
workforce, according to an internal memo obtained by Reuters.
Boeing Co technical workers voted by a wide margin to
ratify a new four-year labor agreement, ending the possibility
of a strike that could have cut production at a critical time
for the aircraft maker.