Stock futures point to higher Wall Street open

Google shares slipped 1.2 percent in extended trading on Tuesday after the leading Internet search provider said it was considering shutting down its China operations and website after it uncovered sophisticated China-based attacks on human rights activists using its Gmail service around the world.

Italy's Ferrero has decided not to bid for Cadbury Plc, further strengthening the case of Kraft Foods in its 10.5 billion pound ($17 billion) takeover bid for the British chocolatier.

At 7 a.m. EST, the Mortgage Bankers Association releases Weekly Mortgage Market Index for the week ended January 8, versus the prior week. The mortgage market index read 462.2 and the refinancing index was 1,976.9 in the previous week.

The Treasury Department issues monthly budget for December at 2 p.m. Economists in a Reuters survey forecast a $92.0 billion deficit compared with a December 2008 budget deficit of $51.754 billion.

Federal Reserve releases at 2 p.m. Beige Book of regional economic conditions.

Two Federal Reserve policy-makers said Tuesday that even though the unemployment rate will likely stay high for a while, the U.S. central bank needs to guard against the potential for inflation as it unwinds its extraordinary economic support.

President Barack Obama's emergency spending measures last year saved up to 2 million U.S. jobs, the White House said on Wednesday, but it warned that the outlook for the economy remained uncertain.

Obama will announce plans Thursday to raise up to $120 billion from major U.S. financial firms to cover expected losses from a taxpayer-funded bank bailout, a senior administration official said Tuesday.

Energy shares will be in focus as crude oil fell more than $1 to below $80 a barrel on an unexpected rise in U.S. distillate stocks despite a surge in demand during a severe northern hemisphere winter.

Investors will also keep a close eye on financial stocks after Societe Generale, France's second-biggest bank by market capitalization, issued a profit warning after the bank, which suffered a record trading loss in 2008, took a new hit of 1.4 billion euros ($2.03 billion) from risky assets.

A unit of struggling bond insurer Ambac Financial Group Inc sued Credit Suisse Securities and a mortgage affiliate for pervasive and material misrepresentations on mortgage-backed securities that Ambac insured in 2007. * An executive from Goldman Sachs said the company in some cases profited by trading ahead of or against its own clients, the New York Times said on its website.

CIT Group Inc, a commercial lender that recently emerged from bankruptcy, has talked to former Merrill Lynch & Co Inc Chief Executive John Thain about him taking the company's reins, according to two people familiar with the matter.

European shares rose Wednesday as gains in defensive food producers and drugmakers outpaced falls in the banking sector. The FTSEurofirst 300 index was up 0.2 percent at 1,055.62 points. * Japan's Nikkei average slipped 1.3 percent Wednesday, hurt by profit-taking and a strong yen.

Tuesday, U.S. stocks slid as investors pummeled financials on concerns about a potential government levy on banks, while Alcoa Inc's disappointing results tempered optimism about the economic recovery.

The Dow Jones industrial average dropped 36.73 points, or 0.34 percent, to 10,627.26. The Standard & Poor's 500 Index fell 10.76 points, or 0.94 percent, to 1,136.22. The Nasdaq Composite Index slid 30.10 points, or 1.30 percent, to 2,282.31.

(Reporting by Harpreet Bhal and Atul Prakash; Editing by Jon Loades-Carter)