* U.S. considering talks with Iran over Iraq
* Medtronic to buy Covidien for $42.9 bln
* Futures down: Dow 41 pts, S&P 5 pts, Nasdaq 8.75 pts
By Chuck Mikolajczak
NEW YORK, June 16 U.S. stock index futures
declined on Monday, on the heels of the S&P's biggest weekly
drop since early April, as turmoil in Iraq sparked investor
* The United States is contemplating talks with its arch
enemy Iran to support the Iraqi government in its battle with
Sunni Islamist insurgents who routed Baghdad's army and seized
the north of the country over the past week.
* Geopolitical tensions in Ukraine also flared as Russian
natural gas exporter Gazprom reduced supplies to
Ukraine on Monday after Kiev failed to meet a deadline to pay
off its gas debts in a dispute that could disrupt supplies to
the rest of Europe.
* Economic data expected on Monday include the Empire State
manufacturing survey for June at 8:30 a.m. (1230 GMT).
Expectations call for a reading of 15 versus the prior reading
* At 9:15 a.m. (1315 GMT), industrial production data for
May is due and the NAHB housing market index is set to be
released at 10:00 a.m. (1400 GMT). Industrial production is
expected to show an increase of 0.5 percent against the 0.6
percent decline in the prior month. The housing market index is
expected to climb to 47 from a prior 45.
* S&P 500 e-mini futures were down 5 points and fair
value - a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the contract
- indicated a lower open. Dow Jones industrial average e-mini
futures fell 41 points and Nasdaq 100 e-mini futures
lost 8.75 points.
* Merger activity continued to be active. Medical device
maker Medtronic Inc agreed to buy Dublin-based Covidien
Plc for $42.9 billion and shift its executive
headquarters to Ireland in the latest move by U.S. firms to
harvest lower tax rates abroad. Medtronic shares gained 11.9
percent to $67.90 in premarket trade while Covidien jumped 35
percent to $97.20.
* Williams Companies climbed 12.4 percent to $53.03
before the opening bell. The pipeline operator said it agreed to
acquire control of Access Midstream Partners LP for
$5.99 billion as the first step toward merging it with its
operations. Jefferies subsequently upgrade Williams to a "buy"
* European stocks slipped in early trading and most Asian
share markets struggled as mounting violence in Iraq prompted
investors to lock in more profits on recent equity market gains.
(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum)