Stock index futures sharply cut losses on Thursday as news of a proposed takeover in the biotechnology sector tempered caution before data that investors fear may show more weakness in consumer spending and the labor market.

In general people are going to be encouraged by seeing more transactions. It certainly speaks to some confidence, said Dan Greenhous, market analyst at Miller Tabak & Co in New York.

S&P 500 futures fell 4.50 points and were below 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 fell 37 points, and Nasdaq 100 futures dipped 8.75 points.

U.S. government reports on weekly initial jobless claims and February retail sales are due out at 8.30 a.m. EDT.

(Reporting by Ellis Mnyandu; Editing by James Dalgleish)