* Instability worries follow Greek election outcome
* Rock-Tenn and MeadWestvaco rally, set to merge
* Futures up: Dow 8 pts, S&P 1.75 pt, Nasdaq 10.25 pts (Updates prices)
By Ryan Vlastelica
NEW YORK, Jan 26 (Reuters) - U.S. stock index futures pointed to a flat open Monday after a decisive Greek election victory by the Syriza party spurred concern over fresh instability in the euro zone, though the possibility of Greece leaving the bloc was considered remote.
The leftist Syriza party looked set to take on Greece's international lenders, with leader Alexis Tsipras pledging to end five years of austerity and renegotiate Greece's debt agreements. Investors were concerned that potential conflicts with other euro zone governments could put more strain on the currency bloc.
While Greece is a relatively small economy that the United States has limited direct exposure to, extended volatility in the region could hurt multinational companies. Separately, if the euro continues to weaken against the dollar, that could be a headwind for earnings.
European shares were volatile after the election, falling as much as 0.4 percent before rising by 0.5 percent. They last traded up 0.2 percent. U.S.-listed shares of the National Bank of Greece fell 6.5 percent to $1.57 in premarket trading.
Last week's larger-than-expected stimulus program announced by the European Central Bank could offset some concerns over Greece. Hopes a compromise may be reached between Athens and its lenders, keeping Greece in the euro zone, may also support sentiment.
The German government said a third debt restructuring was out of the question for Greece, though it opened the door to a possible extension of the country's current bailout program.
In deal news, Rock-Tenn Co and MeadWestvaco Corp said they would combine to form a company worth $16 billion, with MeadWestvaco shareholders owning a majority stake. Rock-Tenn rose 6.6 percent to $67.13 in light premarket trading while MeadWestvaco rose 14.6 percent to $51.60.
AT&T Inc agreed to buy Nextel Mexico for $1.88 billion. Shares edged slightly higher before the bell.
D.R. Horton Inc rose 6.8 percent to $24.67 in premarket trading after the homebuilder reported revenue growth that beat expectations, boosted by home deliveries.
Ocwen Financial Corp jumped 29 percent to $8.20 after the company paid $2.5 million in penalties to the California Department of Business Oversight, which had threatened to suspend Ocwen's license to operate in the state. About 1.5 million shares exchanged hands, making the stock the New York Stock Exchange's most active premarket mover.
Investors await some key earnings reports, including those of Microsoft Corp and Texas Instruments Inc.
With 18 percent of S&P 500 companies having reported, 72.2 percent have topped earnings expectations, while 54.4 percent have beaten revenue forecasts, according to Thomson Reuters data. That compares with the long-term average of 63 percent for earnings and 61 percent for revenue.
Futures snapshot at 8:50 a.m.:
* S&P 500 e-minis were up 1.75 points, or 0.09 percent, with 198,512 contracts changing hands.
* Nasdaq 100 e-minis were up 10.25 points, or 0.24 percent, in volume of 31,536 contracts.
* Dow e-minis were up 8 points, or 0.05 percent, with 31,996 contracts changing hands. (Editing by Bernadette Baum)