Indications: U.S. futures in tight range as contracts expire

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By Barbara Kollmeyer , MarketWatch

MADRID (MarketWatch) -- U.S. stock futures were trading in tight range on Friday as traders brace for the expiration of key options and futures contracts

Futures for the Dow Jones Industrial Average fell 2 points to 10,374, while those for the S&P 500 gained 0.5 points to 1,112.20. Futures for the Nasdaq 100 rose 2 points to 1,911.50.

After a late reversal, U.S. stocks ended higher on Thursday, as gains in technology helped offset the impact of mostly weak economic reports and a successful bond auction in Spain helped soothe concerns over Europe.

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The Dow Jones Industrial Average ended up 24.71 points, or 0.2%, at 10,434.17, while the S&P 500 rose 1.43 points to end at 1,116.04. The Nasdaq Composite finished off 1.23 points, or 0.1%, to 2,307.16.

"Thursday's market actions are encouraging given that U.S. economic data have not been very inspiring lately, and more ominously, companies are starting to issue cautious outlook," analysts at Credit Suisse said in a note to investors.

They also noted "quadruple witching" for Friday. That's when stock index futures, stock index options, stock options and single stock futures all expire and can make for a hectic day for traders. However, a market upturn as of late is believed to have reduced volatility, dulling the effect of quadruple witching somewhat.

There is no data on tap for markets on Friday.

BP /quotes/comstock/13*!bp/quotes/nls/bp (BP 31.71, -0.14, -0.44%) shares rose over 4% in London. Chief Executive Tony Hayward told Congress on Thursday the cause of the oil spill is still unknown. UniCredit cut the shares to hold, saying investors should look beyond the relief rally triggered by the dividend suspension and the escrow account funding.The broker said the clean-up/response costs will be some $7.9 billion post-tax with compensatory and punitive liabilities of $32.8 billion post-tax.

European stocks advanced, with banks up on hopes for more certainty over loans and debt exposure. European Council President Herman Van Rompuy said stress tests on European banks will be published in July. "The united front in Europe should help assuage fears over banks loan books and sovereign debt exposures," said strategists at Davy Stockbrokers.

Spanish Prime Minister Jose Luis Rodriguez Zapatero meets with International Monetary Fund Managing Director Dominique Strauss-Kahn in Madrid on Friday. Market rumors have been swirling for days that Spain is the verge of receiving some sort of bailout help or a line of credit from the IMF and EU, and possibly the U.S. Treasury.

However, many fears have been calmed after Spain's successful bond auction on Thursday and officials were quoted in local newspapers as saying Spain won't need to tap the market for upcoming July maturities.

In Asia, commodity producers fronted gains in Sydney, while Shanghai shares tumbled as investors took profits in a range of stocks that recently have outperformed the benchmark index.

The euro was firmer against the dollar at $1.2392, building on some strength.

"The flow of funds back into the euro reflects a pickup in the broader global macro risk sentiment with equity and commodity prices also finding similar bids," said Joel Kruger, currency strategist with DailyFX.

"However, technical studies still only suggest that the latest price action is only corrective in nature, and a resumption of the underlying trend of a stronger U.S. dollar, lower equities, and lower oil prices, should not be discounted," said Kruger. "The shift in the fundamental outlook seems to be driven more on a lack of bad news than any real significant wave of good news, which surely does not bode well for a sustained recovery."

Barbara Kollmeyer is an editor for MarketWatch in Madrid.