Stock index futures were set to open little changed on Thursday as investors balanced another round of improved U.S. economic data with concerns over rising yields on euro zone debt.

Futures pared earlier losses sparked by rising yields on Spanish debt after data showed U.S. weekly jobless claims dropped to a seven-month low and permits for future home construction rebounded strongly.

Spanish bond yields hit 6.98 percent, their highest level since 1997, at a 10-year auction, while a French bond auction also saw high yields.

You can focus on the good data here, the corporate data, the economic data saying we are not in a recession. We are probably growing a little bit faster in the fourth quarter than we were in the third quarter, and that is a good sign, said John Canally investment strategist and economist for LPL Financial in Boston.

But at the end of the day, bond yields in Europe will rule.

The 7 percent mark is viewed by investors as unsustainable, with both Greece and Portugal forced to seek bailouts after yields hit similar levels. Meanwhile, Spain was pulled deeper into the euro zone debt crisis ahead of a parliamentary election on Sunday.

S&P 500 futures were up 3.1 points but were slightly below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 57 points, and Nasdaq 100 futures rose 9.5 points.

European shares fell to a five-week low in choppy trade as the rising euro zone sovereign bond yields heightened worries that the currency bloc's crisis would spread further and that the region is headed for recession. <.EU>

Investors have recently been forced to weigh the threat of a deepening European crisis against U.S. economic data that has been better than expected.

Economic data still on tap includes the Philadelphia Federal Reserve Bank's November business activity survey at 10 a.m. EST.

Sears Holdings Corp's quarterly loss almost doubled as weak demand at its Sears and Kmart stores hurt sales, it reported early Thursday. Shares fell 5.1 percent to $64.85 in premarket trading.

Applied Materials Inc lost 2.7 percent to $12.13 as the chip gear maker gave a cautious revenue outlook late Wednesday and warned it expects to be affected by a tough economy.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)