Wall Street was set to rise at the open on Monday as Abu Dhabi moved to bail out neighboring Dubai, winding down fears of a potential default that had rattled markets, and as Citigroup Inc reached a deal to pay back $20 billion of U.S. government funds.

Merger activity lent support to the rise in futures after Exxon Mobil Corp said it would buy natural gas supplier XTO Energy Inc in an all-stock transaction valued at $41 billion, including debt.

Shares of XTO soared 18.3 percent to $49.09 in premarket trading, and the Energy Select Sector ETF rose 1.5 percent to $56.38.

Abu Dhabi's aid to Dubai, worth $10 billion, included $4.1 billion for an Islamic bond maturing on Monday. But Dubai said Dubai World creditors still needed to approve a standstill on outstanding debt.

Dubai's get out-of-jail-free card being honored by Abu Dhabi is what's driving things this morning. European banks with (Dubai) exposure are up a lot, said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

Citigroup said it had reached a deal with U.S. regulators to repay $20 billion of shares held by the government by selling $17 billion in stock, allowing it to exit the TARP program in 2010.

Citi shares fell 3.3 percent to $3.82 in premarket trading.

Citi's stock is trading down because of dilution, but (the deal) is good in terms of getting the government out from underneath them and having the banks prove they don't need government in the system, Boockvar said.

S&P 500 futures rose 5.6 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 gained 37 points and Nasdaq 100 futures added 10.75 points.

Sun Microsystems Inc shares jumped 9.7 percent to $9.17 in premarket trading after European Union regulators signaled they could clear Oracle Corp's $7 billion takeover of Sun after Oracle promised measures to ease competition concerns.

Britain's Cadbury Plc said it has received interest from other bidders after raising its growth targets and reporting upbeat trading as it dismissed a $16.5 billion bid from Kraft Foods Inc .

U.S. President Barack Obama will meet with the heads of the largest U.S. banks to push for more small-business lending and to get them behind legislation that seeks to overhaul regulation of Wall Street firms.

The White House said the President will make a statement on the economy after the meeting, scheduled to start at 11:10 a.m. (1610 GMT/ 11:10 a.m. EST).

Crude futures fell 0.4 percent to $69.60 per barrel, down for a ninth straight session.

The Dow and S&P 500 closed up for a third straight day on Friday after several solid consumer-related reports reinforced investors' confidence in a steady economic recovery.

(Editing by Padraic Cassidy)

Investment Citigroup Dubai