By Medha Singh
(Reuters) - U.S. stocks were set to open higher on Wednesday, indicating a rebound from the steep selloff driven by a political crisis in Italy that had pushed the S&P 500 and the Dow Industrials to their worst day in a month.
A renewed attempt to form a coalition government in Rome by the two anti-establishment parties, the 5-Star Movement and League, raised hopes that Europe's third largest economy could avoid a new election.
A surprise breakthrough to form a hung government would ease uncertainty, but still usher in a coalition planning to ramp up spending in the heavily indebted nation and push for changes to European Union and euro-zone fiscal rules.
Equity index futures pared some gains after the second revision to first-quarter GDP data showed U.S. economic growth slowed slightly more than initially thought.
GDP grew at a 2.2 percent annual rate, the Commerce Department said, instead of the previously reported 2.3 percent pace.
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"It's a rebound from yesterday on hopes that there may be some agreement on forming a government. But these kind of perceptions are going to bounce back and forth," said Scott Brown, chief economist at Raymond James in St. Petersburg.
"Markets are a little bit fragile because it's a holiday week. That could lead to some sharp moves either way."
On Tuesday, the S&P 500 and the Dow posted their first 1 percent drop in May as investors scurried for safety assets such as U.S. bonds on fears of political instability in Italy.
At 8:58 a.m. ET, Dow e-minis were up 125 points, or 0.51 percent. S&P 500 e-minis were up 10 points, or 0.37 percent and Nasdaq 100 e-minis were up 14.75 points, or 0.21 percent.
ADP National Employment report showed U.S. private employers added 178,000 private sector jobs in May, below Reuters consensus view of 190,000.
Investors also kept a wary eye on the developments around tariffs and trade. In an unexpected change in tone, the United States said late on Tuesday it could still impose tariffs on $50 billion of imports from China unless it addressed the issue of theft of American intellectual property.
China said on Wednesday it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by U.S. Commerce Secretary Wilbur Ross.
Shares of big U.S. banks rose about 1 percent in premarket trading. The Federal Reserve is set to consider a proposal to modify the "Volcker Rule" at 3:00 p.m. ET.
The proposal, which marks another step by Trump administration regulators to ease banking rules, is aimed at preventing lenders from making market bets while accepting taxpayer-insured deposits.
Among stocks, cloud-based business software maker Salesforce.com rose 4.9 percent, while computer and printer maker HP Inc jumped 4.2 percent after raising full-year profit forecasts.
Michael Kors slipped 5.0 percent after a disappointing yearly earnings forecast.
(Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur)