U.S. stock index futures rose sharply on Tuesday, tracking gains in global equity markets, as investors looked for bargains after Wall Street closed its worst week in two months.

We are looking at a nice bounce here, said Peter Cardillo, chief market economist at Avalon Partners in New York, who said the market was heavily oversold. It's all about bargain hunting this morning.

At the start of a trading week shortened by the U.S. Independence Day holiday, investors will monitor the Institute for Supply Management's non-manufacturing report due at 10 a.m., as concerns have grown that an economic recovery may be slowing. Economists look for a reading of 55.0 versus 55.4 in the previous report.

Stocks sold off last week after the ISM manufacturing survey came in much weaker than expected.

Banks and technology shares were among the early gainers, with Goldman Sachs Group Inc rising 2.3 percent to $134.10 in premarket trading following an upgrade to overweight by JPMorgan. Apple Inc rose 1 percent to


S&P 500 futures added 9.7 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 jumped 84 points, and Nasdaq 100 futures increased 25.25 points.

The S&P 500 fell every day last week and has declined 8.3 percent since the beginning of the year. Signs of weakness in the labor and housing markets as well as a potential slowdown in manufacturing have worried investors.

Dallas Federal Reserve President Richard Fisher said the timing of U.S. monetary policy tightening will depend on conditions in the U.S. economy, which will slow down in the rest of 2010, he told Japan's Nikkei newspaper on Tuesday.

In Europe, stocks bounced back from a six-week closing loss following strength in Asian equity markets. Europe's FTSEurofirst 300 <.FTEU3> rose 2.2 percent near midday, while Japan's leading Nikkei <.N225> average bounced off a 7-month low to close up nearly 0.8 percent.

Australia, which relies on demand for its natural resources from Asia's commodity-hungry economies, remained upbeat on the outlook for Asia and held its key cash rate steady for a second month.

BP Plc has approached sovereign wealth funds with a view to securing a strategic investor to fend off takeover bids while it deals with its massive U.S. oil spill, a senior United Arab Emirates source said on Tuesday. BP's New York traded stock rose 5.6 percent in premarket trading to $31.00.

(Editing by Padraic Cassidy)