* Latest China data points to slowing economy
* Ukraine tensions continue, Merkel warns Russia
* Initial claims, retail sales data due
* Futures up: Dow 20 pts, S&P 3 pts, Nasdaq 7.75 pts
NEW YORK, March 13 (Reuters) - U.S. stock index futures advanced modestly on Thursday, putting the S&P 500 on track for a second day of gains, ahead of data on the labor market and consumer spending.
* Advances were held in check by another round of limp data out of China, the world's second-biggest economy. China's economy slowed markedly in the first two months of the year, as growth in investment, retail sales and factory output all fell to multi-year lows.
* Investors were looking ahead to weekly initial jobless claims data and retail sales for February, due out at 8:30 a.m. ET (1230 GMT). Expectations are for claims to have risen to 330,000 from 323,000 filings in the prior week. Retail sales are forecast to have risen 0.2 percent, against a 0.4 percent fall in the prior month.
* Also due at 8:30 a.m. are import and export prices for February. Import prices are expected to have risen 0.4 percent with export prices forecast to have climbed 0.2 percent.
* Investors have discounted many economic numbers that have fallen short of expectations recently, attributing the weakness to a harsh winter across much of the country.
* Tensions in Ukraine continued to flare. Germany's Angela Merkel warned Moscow it risked "massive" political and economic damage if it refused to change course on Ukraine, saying Western leaders were ready to impose sanctions on Russia if necessary. Russia announced it had started military exercises near the border with Ukraine, in what is likely to be seen as a show of force in the standoff with the West over the Crimea peninsula.
* S&P 500 e-mini futures rose 3 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 gained 20 points and Nasdaq 100 futures added 7.75 points.
* Later in the session at 10:00 a.m. (1400 GMT) business inventories data for January is due. Expectations call for a 0.4 percent increase versus a 0.5 percent rise in the prior month.
* Krispy Kreme Doughnuts Inc jumped 10.1 percent to $21.88 in light premarket trading after it raised its full-year earnings per share forecast and said it would buy back $30 million shares.
* Venaxis Inc surged 27.3 percent to $3.45 before the opening bell after the in-vitro diagnostics company said it had positive top-line results in a study for its APPY1 test used to gauge appendicitis risk.
* European stocks inched higher, halting a two-week slide, although a sell-off among UK retailers after a profit warning by Morrison's limited the rebound.
* Asian shares cautiously rebounded from two-week lows but gains were pared after disappointing retail sales and factory output data underscored investors' concerns over a slowdown in China.