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* U.S. consumer spending rises in-line with expectations in Sept
* PCE data, Fed's key inflation measure, flat year-over-year
* FAANGs higher in premarket trading
* IBM drops on $34 bln deal for Red Hat, which jumps
* GM, Ford up on report China mulls cutting car purchase tax
* Futures up: Dow 0.61 pct, S&P 1.01 pct, Nasdaq 1.16 pct (Adds comments, updates prices)
By Shreyashi Sanyal
Oct 29 (Reuters) - Wall Street was set to bounce back on Monday from a steep sell-off last week, helped by gains in auto stocks, signs of a recovery in high-growth companies and relief over an unchanged rating on Italy.
Wall Street was rocked this month by jitters over geopolitical events as well as fears over tariffs, rising wages and borrowing costs. The Dow and the S&P 500 returned to negative territory for the year on Friday.
Relief over Italy dodging a ratings downgrade helped U.S. stock futures reverse a decline after data showed China's industrial profit growth slowed for fifth straight month in September, pointing to cooling domestic demand in the world's second-biggest economy.
The five high-growth FAANG stocks- Facebook Inc, Apple Inc, Netflix Inc, Alphabet, Amazon.com Inc were up between 1.4 percent and 2.25 percent in premarket trading.
"News on Europe doing better and a tailwind with the large M&A deal, we have a market that is a bit easier to head into," said Art Hogan, chief market strategist at B. Riley FBR in New York.
The slowdown in China, a major source of income for several American companies, has been a major concern this earnings season, with a slew of corporates from industrials to chipmakers giving discouraging forecasts.
While healthy third-quarter results have pushed up third-quarter profit estimates at S&P companies to 25.2 percent from 21.8 percent in the past 10 days, dour forecast have pulled down the current-quarter's growth outlook to 19.5 percent from 19.9 percent, according to Refinitiv data.
Carmaker Ford Motor Co rose 4.5 percent, while General Motors Co gained 4.6 percent after Bloomberg reported China was planning to cut the tax levied on car purchases by half.
"Investors are coming in today from an oversold market last week," Hogan said. "Markets are set to have a positive reaction to any form of good news."
At 9:10 a.m. ET, Dow e-minis were up 150 points, or 0.61 percent. S&P 500 e-minis were up 27 points, or 1.01 percent and Nasdaq 100 e-minis were up 80 points, or 1.16 percent.
Futures held on to their gains as U.S. consumer spending for September rose in line with expectations and income recorded its smallest gain in more than a year, suggesting a moderation in spending in the future.
Shares of IBM Corp fell 4.7 percent, the most among S&P 500 components before the opening bell, after the company agreed to buy software company Red Hat Inc for $34 billion. Red Hat shares soared 49.1 percent.
Tesla Inc rose 2.6 percent as the Times reported that the electric carmaker's third largest shareholder, Baillie Gifford & Co, would be willing to inject more cash in the company. Another report said German luxury carmaker Daimler AG does not rule out cooperating with Tesla in the future. (Reporting by Shreyashi Sanyal in Bengaluru)