Stock indexes were set to continue their upward trend at the open on Tuesday as optimism continued to permeate the market ahead of data on factory orders and car sales.

A climb in the futures followed a rise in U.S. stock indexes on Monday on encouraging signs about the outlook for manufacturing around the world that prompted investors to inject new money into equities.

Coming on the heels of recent data pointing to a growing economic recovery, investors will eye the U.S. Commerce Department's release of November factory orders at 10 a.m. EST, with economists expecting a drop of 0.1 percent, compared with a 0.9 percent fall in the prior month.

Monthly auto sales figures will also be closely watched. Fifteen economists surveyed by Reuters forecast December auto sales of about 12.3 million on the annualized and seasonally adjusted basis tracked by the industry.

The bullish attitude is continuing and probably will continue as the data points to strong economic growth, said Peter Cardillo, chief market economist at Avalon Partners in New York.

S&P 500 futures rose 2.9 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 33 points, and Nasdaq 100 futures added 5.75 points.

Monday's rally that had the Dow and S&P reaching new two-year highs was accompanied by a rise in volume, with more than 7.7 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above the 50-day moving average. The volume increase may indicate the gains could extend into Tuesday.

Morgan Stanley said its base case year-end target for the S&P 500 is 1,238. The index closed Monday at 1,271.89. The firm's risk-reward scenario for 2011 was skewed to the negative.

Investors will look into Federal Open Market Committee minutes from the December 14 meeting for clues on the U.S. central bank's outlook on the economy. The minutes are due at 2 p.m. EST.

European stocks <.FTEU3> were up 1.2 percent, with oil major BP Plc up nearly 6 percent after Britain's Daily Mail newspaper reported rival Royal Dutch Shell had considered a takeover bid during the Gulf of Mexico oil spill. Asian markets were also broadly higher. <.EU>

Mining stocks will be in focus as floods eased in Australia's major coal mining region, allowing some mines to slowly resume production although most remained idle.

Defense sector stocks will also be eyed, with U.S. Defense Secretary Robert Gates expected to detail about $100 billion in Pentagon savings and cuts to weapons programs as early as Thursday. The PHLX defense index <.DFX> hit a seven-month high on Monday. [ID:nN03185583]

General Motors Co said it sold 2.35 million vehicles in China in 2010, up 28.8 percent from a year earlier. GM was up 0.5 percent at $37.25 in premarket trading.

Borders Group Inc dropped more than 10 percent in premarket trading to 86 cents, a day after two top executives of the bookseller resigned.

(Reporting by Rodrigo Campos; additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)