Stock Futures up, S&P 500 poised to rally for an eighth day

NEW YORK (Reuters) - Stock index futures gained on Friday and the S&P 500 looked set to extend its best winning streak in more than six years, as rosy earnings from Procter & Gamble came amid a broader backdrop of healthy corporate results.

The strong start to the year for the equities market has also been attributed to agreement in Washington to extend the government's borrowing power through mid-May, encouraging signs of recovery in the global economy and seasonal inflows to equity markets.

Those factors helped the S&P 500 rally for a seventh day on Thursday to a five-year peak. Still, the index is struggling to climb convincingly above 1,500, a level it surpassed briefly Thursday for the first time since December 2007.

"You have had more confidence from fund managers to provide more allocations to equity markets," said Rick Meckler, president of investment firm LibertyView Capital Management, who added equities were looking more attractive than bonds or cash.

S&P 500 futures rose 4.7 point and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 44 points and Nasdaq 100 futures rose 12.50 points.

If the S&P 500 rises for an eighth day, it will be its longest winning in eight years. The index had climbed for nine straight days in a run that ended in November 2004.

Procter & Gamble , the world's top household products maker, said Friday quarterly profit soared past expectations and raised its sales and earnings outlook for the fiscal year. Shares were up 1.7 pct at $71.58 in premarket trading.

Pointing to a rotation out of bonds, U.S. 30-year Treasury bonds traded more than a point lower in price on Friday, with yields touching session highs at 3.10 percent.

Recent company earnings have been encouraging. Thomson Reuters data through early Thursday showed that of the 133 S&P 500 companies that have reported earnings so far, 66.9 percent exceeded expectations, more than the 65 percent average over the past four quarters.

Microsoft Corp's reported lower quarterly profit on Thursday as Office software sales slowed ahead of a new launch, offsetting a solid but unspectacular start for its Windows 8 operating system and sending the company's shares down 0.8 percent in premarket trading.

Apple stepped up audits of working conditions at major suppliers last year, discovering multiple cases of underage workers, discrimination and wage problems. The shares, which fell 12 percent Thursday after disappointing earnings, edged up 0.6 percent to $453.40.

German business morale improved for a third consecutive month in January to its highest in more than half a year, providing further evidence that growth in Europe's largest economy was gathering speed after contracting late last year.

Echoing a more positive tone in Europe, ECB President Mario Draghi said he expects the euro zone economy to recover later this year, adding that financial market improvements have not yet trickled into the general economy. Draghi was speaking at the World Economic Forum in Davos on Friday.

The U.S. Commerce Department releases new home sales data for December at 10:00 a.m. (1500 GMT). Economists forecast a total of 385,000 annualized units, compared with 377,000 in November.

Economic Cycle Research Institute releases its weekly index of economic activity for January 18 at 10:30 a.m. (1530 GMT). In the prior week the index read 130.

(Editing by Bernadette Baum)