Stock index futures were higher on Wednesday but more volatility was seen as investors awaited data on the labor market and services sector and European finance ministers appeared ready to prop up struggling banks.

Equities ended sharply higher on Tuesday in a very volatile session, with the S&P rising more than 2 percent after dipping into bear market territory -- defined as a 20 percent decline from recent highs.

Markets whipsawed on Tuesday, first falling as European officials postponed a vital aid payment to Greece, then rallying after officials moved to safeguard banks.

European equities were further lifted on Wednesday by the reports that regional finance ministers had expressed a new sense of urgency about the financial crisis and would prepare a plan to recapitalize banks. The FTSEurofirst 300 <.FTEU3> index of top European shares rose 2 percent.

The safeguard is a big deal, but it could just be a short-term release valve, said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

There's going to be an ebb and flow in any progress, and markets will be volatile and manic as that occurs. We remain vulnerable to shocks, which is why we need to see resolution.

Wall Street has taken its cues from Europe lately, with volatility rising on every sign of progress or delay in tackling the crisis. Fear of contagion have contributed to weakness in recent months and sent the S&P flirting with bear market territory.

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 added 37 points, and Nasdaq 100 futures rose 7 points.

Worries over Europe have persisted despite better-than-expected U.S. economic data. More was due on Wednesday, with the Institute for Supply Management releasing its September non-manufacturing survey at 10 a.m. EDT <1400 GMT>. The survey is seen at 52.9 versus 53.3 in the prior month.

The ADP national employment report, coming at 8:15 a.m. EDT, is expected to show 75,000 jobs were created in September versus 91,000 last month. The report comes ahead of Friday's key non-farm payrolls report, which is seen adding jobs in a rebound from August, a month of flat growth.

We're expecting deterioration in both datapoints, but anything far from expectations could add to intraday volatility, TEAM Asset's Dailey said.

Costco Wholesale Corp said early Wednesday that fourth-quarter earnings rose from a year ago, but missed expectations, while late Tuesday fast food chain operator Yum Brands Inc reported a quarterly profit that matched expectations.

Investors rushed in to buy technology and other beaten-down sectors as the S&P 500 dipped in and out of a bear market on Tuesday before a late rally drove the index to its largest gain in more than a week.

(Editing by Jeffrey Benkoe)