Stocks were poised to rebound at the open Tuesday after declines in the prior session as a drop in Spain's borrowing costs and unexpectedly positive data from Germany eased euro zone debt worries.

Short-term financing costs for struggling Spain more than halved as banks lapped up debt at an auction, with much of the purchasing power said to have come from cut-rate loans from the European Central Bank.

U.S. banks, plagued by concerns about exposure to the euro zone crisis, dragged U.S. stocks lower Monday, with losses accelerating late in the session. Bank of America Corp's stock price fell below $5 for the first time in nearly three years.

Bank of America shares were up 2.4 percent to $5.11 and Citigroup Inc added 2.8 percent to $25.53 in premarket trade.

Headlines and fluctuating bond prices out of the euro zone continued to spark high volatility. The market will be prone to large swings this week on expected low volume due to the upcoming Christmas holiday.

We will continue to see it as we get a lot of volatility, mainly because there are no new assets coming back into the equity markets to drive direction in the market, said Nathan Snyder, portfolio manager at Snow Capital Management in Sewickley, Pennsylvania.

The market is obviously built off expectations -- the expectations at this point are for continued problems in Europe and then potentially problems in China. That is what is baked in and anything that disrupts that or enhances that view is only going to add to the trading in the marketplace. Whether that is up or down from these valuations is anybody's guess.

S&P 500 futures climbed 17 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 rose 147 points, and Nasdaq 100 futures added 31 points.

The Munich-based Ifo think-tank said German business sentiment rose sharply in December, defying expectations it would decline and underscoring the resilience of Europe's biggest economy.

The first-ever offer of three-year loans to banks from the European Central Bank on Wednesday is expected to be a strong indicator of whether debt-loaded countries get some relief or endure more pain.

On the economic front, data showed U.S. housing starts surged to a 1-1/2 year high in November and permits for future construction were the highest since March 2010 as demand for rental apartments rose.

AT&T Inc shed 0.6 percent to $28.58 in premarket after it dropped its controversial bid for T-Mobile USA, the Deutsche Telekom unit, bowing to fierce regulatory opposition.

Red Hat Inc slid 7.6 percent to $42.55 after the Business software maker forecast fourth-quarter revenue below expectations, hurt by a weaker euro.

Navistar International Corp jumped 7.4 percent to $39.25 after quarterly profit exceeded expectations as it reported its best annual performance since 2008.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)