By Ellis Mnyandu NEW YORK, Nov 3 (Reuters) - U.S. stock index futures rose on Monday as a further drop in interbank lending rates suggested that credit continued to loosen up, offsetting caution ahead of key economic data. Stocks to watch include Boeing after 27,000 assembly workers voted to approve the company's four-year contract offer on Saturday, ending a strike that stopped production at the plane maker's Seattle area plants for 57 days. For more see[ID:nN01421815]. The costs for bank to borrow dollars from each other again fell, sending three-month rates down for a 17th straight day and boosting hopes that steps to restore confidence in credit markets are paying off. Free-flowing credit is seen as crucial in helping avert an acute economic downturn as investors fret about a global recession. "The fact that interbank rates are really coming down is an indication that we should begin to see the credit markets respond and that's going to be the key," said Peter Cardillo, chief market economist at Avalon Partners in New York. He added that the market has probably discounted an election victory of Democrat Barack Obama, heading into Tuesday's U.S. presidential election. "It looks like we will have a Democratic president, so the election and the anticipation of the economic data is probably going to keep the market in a very tight range for most of the session today and tomorrow as we go to the polls." S&P 500 futures SPc1 rose 3.70 points 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 DJc1 climbed 54 points, and Nasdaq 100 NDc1 futures gained 2.00 points. Monday's economic diary includes the Institute for Supply Management October manufacturing index at 10 a.m. (1400 GMT). Economists in a Reuters survey expect a reading of 41.5 versus 43.5 in September. But the highlight of the week will be Friday's report on October U.S. nonfarm payrolls. Boeing (BA.N: Quote, Profile, Research, Stock Buzz) shares rose nearly 3 percent to $53.86 before the bell. Separately, Goldman Sachs added the stock to a "conviction sell" list, according to theflyonthewall.com. J.P. Morgan Securities raised Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), a Dow component, to "overweight" from "neutral." Democrat Barack Obama heads into Tuesday's voting in a comfortable position, with McCain struggling to overtake his lead in every national opinion poll and to hold off his challenge in about a dozen states won by President George W. Bush in 2004. Obama leads McCain in six of eight key battleground states, including the big prizes of Florida and Ohio, according to a series of Reuters/Zogby polls released on Monday. Obama holds a 7-point edge over McCain among likely U.S. voters in a separate Reuters/C-SPAN/Zogby national tracking poll, up 1 percentage point from Sunday. The telephone poll has a margin of error of 2.9 percentage points. [ID:nN03354084]. U.S. stocks ended one of their worst months on record on Friday but signs of further thawing in credit markets lifted battered shares. (Editing by James Dalgleish)

Source