* Geopolitical issues may be market's biggest driver
* MannKind signs agreement with Sanofi, shares jump
* Kinder Morgan up on $70 bln deal to consolidate assets
* Futures up: Dow 57 pts, S&P 8 pts, Nasdaq 20.5 pts
By Ryan Vlastelica
NEW YORK, Aug 11 (Reuters) - U.S. stock index futures were higher on Monday, indicating that Friday's sharp rally could continue as it appeared less likely that the tense situation between Russia and Ukraine would escalate.
* The S&P 500 and Dow on Friday posted their best day since March on news that Russia was ending military drills near the Ukrainian border, a move that was seen as indicating Russia would not send troops into Ukraine anytime soon. European shares rose more than 1 percent on Monday.
* With earnings season nearly over, market action is likely to see an outsized influence from geopolitical issues, especially from the Middle East due to the region's impact on the commodities markets.
* The United States recently launched air strikes in Iraq targeting Islamic State fighters marching on the country's Kurdish capital. The U.S. is also pushing for a new Iraq government, which Prime Minister Nuri al-Maliki has been battling to prevent, deploying forces across Baghdad as some parliamentary allies sought a replacement.
* In the Middle East, Israel and the Palestinians agreed on Sunday to an Egyptian proposal for a new 72-hour ceasefire in Gaza.
* The CBOE Volatility index has been at relatively elevated levels of late, closing above 15 every day this month. While 15 is well below the VIX's long-term average of 20, it follows a multi-month period where the so-called "fear index" rarely closed above 13.
* S&P 500 e-mini futures rose 8 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 e-mini futures rose 57 points and Nasdaq 100 e-mini futures added 20.5 points.
* In company news, MannKind Corp rose 21 percent to $9.82 in premarket trading after French drugmaker Sanofi signed a worldwide licensing agreement with the company worth up to $925 million. MannKind was the Nasdaq's most active premarket mover.
* Kinder Morgan Inc on Sunday said it would put all its publicly traded units under one roof in a $70 billion deal, an amount including $27 billion in assumed debt. The company was responding to investor concerns about its growth prospects and complicated financial structure. Shares jumped 8 percent to $39 in premarket trading.
* Stocks that pay high dividends, including utility and telecommunication names, may see increased demand as Treasury yields fall. The utility sector is one of 2014's strongest, up 8.8 percent as investors have sought more defensive plays throughout the year. (Editing by Chizu Nomiyama)