US STOCKS-Futures drop as Iraq turmoil continues
* U.S. considering talks with Iran over Iraq
* Medtronic to buy Covidien for $42.9 bln
* Futures down: Dow 41 pts, S&P 5 pts, Nasdaq 8.75 pts
By Chuck Mikolajczak
NEW YORK, June 16 (Reuters) - U.S. stock index futures declined on Monday, on the heels of the S&P's biggest weekly drop since early April, as turmoil in Iraq sparked investor caution.
* The United States is contemplating talks with its arch enemy Iran to support the Iraqi government in its battle with Sunni Islamist insurgents who routed Baghdad's army and seized the north of the country over the past week.
* Geopolitical tensions in Ukraine also flared as Russian natural gas exporter Gazprom reduced supplies to Ukraine on Monday after Kiev failed to meet a deadline to pay off its gas debts in a dispute that could disrupt supplies to the rest of Europe.
* Economic data expected on Monday include the Empire State manufacturing survey for June at 8:30 a.m. (1230 GMT). Expectations call for a reading of 15 versus the prior reading of 19.01.
* At 9:15 a.m. (1315 GMT), industrial production data for May is due and the NAHB housing market index is set to be released at 10:00 a.m. (1400 GMT). Industrial production is expected to show an increase of 0.5 percent against the 0.6 percent decline in the prior month. The housing market index is expected to climb to 47 from a prior 45. Continuación...