April 1, 2019 / 1:13 PM / 3 months ago

US STOCKS-Wall Street set to rally on China data, trade hopes

* U.S. retail sales fall unexpectedly in February

* Chipmakers rally on positive China data

* Merck gains on China nod for Keytruda

* Futures up: Dow 0.84 pct, S&P 0.75 pct, Nasdaq 1.00 pct (Adds comments, updates prices)

By Sruthi Shankar

April 1 (Reuters) - Wall Street was to set to mirror a global stocks rally on Monday as a surprise recovery in China factory activity and further hints of progress in U.S.-China trade talks helped extend last quarter’s buoyant mood.

U.S. stocks ended the first quarter on a high note on Friday, with the S&P 500 logging its best quarter since 2009 as investors bet the United States and China will strike a deal to end their protracted trade war.

The S&P 500 is 3.4 percent away from a record closing high hit in September last year.

Adding to the upbeat sentiment, a survey showed China’s manufacturing sector unexpectedly returned to growth for the first time in four months in March, in a sign that government stimulus measures may be slowly gaining traction.

“Better manufacturing data out of China over the weekend has helped push equity markets into to the ‘black’ on day one of a new quarter,” Dean Popplewell, vice president of market analysis, at Oanda said.

Technology stocks, the best performer among the 11 major S&P sectors with a 19.4 percent gain last quarter, were again set to boost Wall Street at open. Apple Inc was up 0.8 percent premarket, while chipmakers, which have a large revenue exposure to China, also gained.

Micron Technology Inc was up 2.4 percent and Advanced Micro Devices Inc rose 2.9 percent.

All 30 components of the Dow Jones Industrial Average trading premarket were higher.

At 8:46 a.m. ET, Dow e-minis were up 217 points, or 0.84 percent. S&P 500 e-minis were up 21.25 points, or 0.75 percent and Nasdaq 100 e-minis were up 73.75 points, or 1 percent.

China numbers came as a relief to markets concerned about a global growth slowdown after the Federal Reserve abruptly ended its monetary tightening policy cycle, driving the 10-year U.S. bond yields below 3-month T-bill rates for the first time in more than a decade.

Futures dipped slightly before easing back to the same level after U.S. retail sales unexpectedly fell 0.2 percent in February. Economists polled by Reuters had forecast retail sales rising 0.3 percent.

The Institute of Supply Management’s national factory activity index and a final reading of Markit PMI of U.S. factory activity for March are due later in the day.

China’s State Council said on Sunday it would continue to suspend additional tariffs on U.S. vehicles and auto parts after April 1, in a goodwill gesture following a U.S. decision to delay tariff hikes on Chinese imports.

General Motors Co rose 0.8 percent and Ford Motor Co was up 0.6 percent.

Merck & Co Inc climbed 1 percent after the drugmaker received conditional approval in China for its blockbuster drug, Keytruda, to treat a type of lung cancer. (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)

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