* Indexes up: Dow 60 pts, S&P 5.25 pts, Nasdaq 11 pts
By Sruthi Shankar
Sept 18 (Reuters) - U.S. stock index futures were higher on Monday, indicating a continuation of last week's winning streak, as investor appetite for riskier assets increased on easing tensions on the Korean peninsula and ahead of Federal Reserve's rate-setting meeting.
* The Federal Open Market Committee starts the two-day meeting on Tuesday. While the meeting is not expected to result in an interest rate increase, investors will focus on how Fed Chair Janet Yellen characterizes recent inflation readings for clues on the timing of further rate hikes.
* Persistently weak readings of inflation that have remained below the Fed's 2 percent target rate have been a concern for policymakers. However, a stronger-than-expected rise in consumer prices in August have triggered a more than 50 percent rise in the odds of a December rate hike, according to CME Group's FedWatch tool.
* The central bank is also expected to announce plans to begin unwinding its $4.2 trillion portfolio of Treasuries and mortgage-backed securities, nearly a decade after the global financial crisis.
* Investors largely shrugged off concerns after a relatively quiet weekend in the Korean peninsula.
* On Friday, the benchmark S&P 500 index closed at a record high, hitting the 2,500 level for the first time, largely helped by a rebound in technology stocks.
* The S&P's breach of the 2,500-mark came less than four months after it closed above 2,400 and brought 2017's gain to nearly 12 percent.
* Economic data in the day includes a report on NAHB Housing Market Index at 10 a.m. ET (1400 GMT). The index, a measure seen as a proxy on domestic housing starts, is expected to edge down to 67 for September, from 68 in August.
* In merger news, Orbital ATK jumped more than 20 percent in premarket trading after Northrop Grumman said it would buy the missile and rocket maker for about $7.8 billion in cash. Northrop's shares were little changed.
* Rite Aid rose about 10 percent on a report that drugstore chain operator, Walgreens Boots, was set to revise its agreement to buy some Rite Aid stores.
* Caterpillar was up 1.6 percent following an upgrade from UBS to "buy" from "neutral".
Futures snapshot at 7:02 a.m. ET:
* S&P 500 e-minis were up 5.25 points, or 0.21 percent, with 92 contracts changing hands.
* Nasdaq 100 e-minis were up 11 points, or 0.18 percent, in volume of 12 contracts.
* Dow e-minis were up 60 points, or 0.27 percent, with 15 contracts changing hands.
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur