U.S. stock index futures pointed to a higher open on Monday on a flurry of merger-and-acquisition activity and after Caterpillar reported stronger-than-expected quarterly profit.

Caterpillar Inc, the heavy machinery maker, also raised its full-year profit forecast, saying economic conditions are definitely improving. The Dow component gained 3.2 percent to $70.95 before the bell.

Caterpillar set a tone for us to be aggressively higher, and it speaks to strength in the industrial and manufacturing sectors, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

Whirlpool Corp climbed 9.7 percent to $112.15 after reporting adjusted first-quarter earnings that beat estimates and raised its full-year profit view, a bullish sign for consumer spending.

Hertz Global Holdings Inc agreed to buy rival car rental company Dollar Thrifty Automotive Group Inc for about $1.2 billion, while Charles River Laboratories International , the U.S. clinical research company, plans to acquire WuXi PharmaTech Inc for $1.6 billion.

Dollar Thrifty gained 6.3 percent to $41.30 before the bell, while WuXi surged 22 percent to $20.30.

Also, U.S. investment bank Stifel Financial Corp will buy rival Thomas Weisel Partners Group Inc for about $300 million in stock.

M&A activity is a confirmation of how strong the recovery is becoming, Kenny said. It's exactly what we've been looking for and has been long awaited.

S&P 500 futures rose 2 points and were slightly 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 gained 27 points, while Nasdaq 100 futures added 0.25 points.

Citigroup Inc slipped nearly 1 percent to $4.82 after the U.S. Treasury said it will begin selling its huge stake in the bank. The government acquired 27 percent of the bank after $45 billion in bailouts.

Greece remained in focus a day after a Greek official said an aid package would help avert a sovereign debt default, though signs grew the package may have to be bigger. The situation in Greece has weighed on equities in recent weeks.

The two Democratic Senators trying to come up with a bill regulating the $450 trillion private swaps market are near a deal, and will include a provision to require banks to spin off swaps desks, sources said Sunday.

European stocks advanced more than 1 percent Monday, led by banking shares, as worries eased over Greece's woes <.EU>. while Japan's Nikkei average <.N225> closed up 2.3 percent.

The Dow and Nasdaq chalked up their eighth straight week of gains on last week, and indexes closed at a 19-month high on Friday after Merck said costs from healthcare reform will be lower than its rivals.

(Editing by Jeffrey Benkoe)