January 7, 2019 / 2:19 PM / 2 months ago

US STOCKS-Futures flat after Wall Street's strongest surge in 2019

(Adds comment, details, updates prices)

* Focus on U.S.-China trade talks, ISM services sector data

* Loxo Oncology soars on $8 bln buyout offer from Eli Lilly

* PG&E shares slump after reports of exploring bankruptcy

* Futures: Dow up 0.12 pct, S&P off 0.07 pct, Nasdaq down 0.17 pct

By Sruthi Shankar

Jan 7 (Reuters) - Wall Street was set to open little changed on Monday after its biggest one-day surge in the new year, as investors turned wary of the latest round of U.S.-China trade talks and a prolonged government shutdown.

The world's two biggest economies kicked off talks in Beijing on Monday, the first face-to-face meeting since U.S. President Donald Trump and China's President Xi Jinping in December agreed to a 90-day truce in the trade war to help strike a deal.

After ominous signs the trade war was taking a toll on U.S. growth, including Apple Inc's sales warning and weak factory activity data, investors are worried that corporate profits could take a bigger hit than anticipated.

"Trade has been one of the big factors, along with the budget stalemate, contributing to the climate of fear that we're seeing," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

"We've been through this (trade talks) so many times that you'd wonder when the market would get desensitized to it."

Futures barely moved after U.S. Secretary of Commerce Wilbur Ross said on Monday the two countries were likely to reach a good settlement over immediate trade issues while an agreement on structural trade issues and enforcement will be harder.

The White House chief of staff said on Sunday the U.S. federal government shutdown, now entering its third week, could "drag on a lot longer".

A report from the Institute of Supply Management, due at 10:00 a.m. ET, is expected to show that its index of services sector activity fell to a reading of 59.0 in December from 60.7 in the previous month.

The report comes on the heels of ISM's manufacturing index posting its largest drop since the financial crisis in 2008, suggesting that slowing growth in China and Europe could be spilling over into the United States.

At 8:48 a.m. ET, Dow e-minis were up 29 points, or 0.12 percent. S&P 500 e-minis were down 1.75 points, or 0.07 percent and Nasdaq 100 e-minis were down 11.25 points, or 0.17 percent.

Wall Street's main indexes rallied more than 3 percent on Friday after a strong U.S. jobs data and dovish comments from Federal Reserve Chair Jerome Powell.

Powell said the Fed is not on a preset path of interest rate hikes and that it will be sensitive to the downside risks markets are pricing in.

Among premarket movers, General Electric Co's shares rose 2.9 percent after reports that private equity firm Apollo Global Management was working on an offer to acquire the company's aircraft leasing operations.

Loxo Oncology Inc shares surged 65.5 percent after Eli Lilly and Co said it would buy the cancer drug developer for about $8 billion in cash. Lilly shares fell 2 percent.

PG&E Corp shares slumped 19.7 percent after Reuters reported that the California utility was exploring filing some or all of its business for bankruptcy protection as it faces billions of dollars in liabilities related to fatal wildfires in 2018 and 2017. (Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)

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