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Futures Pare Gains Despite Euro Zone Hopes

Futures pared some of their gains ahead of the open Wednesday, even after a better-than-expected private sector employment report and despite optimism that a solution will be found to protect Europe's banks from the effects of the Greek crisis.

On the economic front, private sector employment gained more than expected, rising 91,000 in September, according to Automatic Data Processing. Economists had expected a gain of 75,000, according to Reuters.

Meanwhile, the number of planned layoffs at U.S. firms in September jumped to 115,730 last month, the highest in more than two years, according to Challenger, Gray & Christmas. The figure was more than double August's total of 51,114.

European shares were higher, led by financials, after European finance ministers agreed to safeguard the region's lenders and as investors snapped up bargains following three days of losses.

Moody’s downgraded Italy’s credit rating by three notches to A2 from Aa2 and maintained its negative outlook for the economy. The latest rating action concluded the review for downgrade initiated by Moody's on 17 June, 2011.

And in Greece, thousands of striking workersmarched against a plea from the Greek government to back its austerity plans, shutting down schools, flights and government offices. Adding to woes, Spain’s employment minister Valeriano Gomez admitted to CNBC the country would most likely miss its economic growth targetfor the year.

Meanwhile, Belgium and France were expect to finalize a rescue plan for Dexiaby Thursday that would sever the bank's French lending business and may nationalize its Belgian arm. Dexia shares hit an all-time low in the previous session, battered by heavy exposure to Greece.

Sprint Nextel said it will sell the next version of Apple's iPhone, ending months of speculation about whether it would become the third U.S. operator to sell the popular device.

Asian smartphone makers have a chance to exploit a rare letdown from Appleafter the new iPhone 4S failed to wow fans and investors, leaving Android rivals better placed to grab market share. And Samsung filed an injunction in Seoul, South Korea against Apple over sales of the iPhone 4S in Italy and France in a continuation of its patent dispute with Apple.

Also on the tech front, Stifel cut its rating on Google to "hold" from "buy." And JPMorgan resumed coverage on Hewlett-Packard with an "underweight" rating and at a price target of $20.

EU regulators will formally object this week to the planned merger of Deutsche Boerse and NYSE Euronext, according to Reuters.

Bank of New York Mellon was sued by New York federal and state prosecutors who accused the bank of cheating clients in foreign exchange transactions.

On the earnings front, Costco missed its quarterly profit and sales target, adding it will increase its membership fee for a little more than 22 million members.

Yum Brands declined after the parent company of KFC posted a profit that matched estimates, but failed to assuage investor concernsabout slowing growth in China, its biggest market.

The Institute for Supply Management releases its September non-manufacturing index at 10am ET. Economists polled by Reuters forecast a reading of 52.9 versus 53.3 in August.

Weekly mortgage applications slipped last week, according to the Mortgage Bankers Association, reflecting a demand decline for refinancing loans even as interest rates fell.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

Coming Up This Week:

WEDNESDAY: ISM non-mfg index, oil inventories; Earnings from Marriott
THURSDAY: BoE announcement, ECB announcement, jobless claims, chain-store sales; Earnings from Constellation Brands
FRIDAY: Non-farm payroll, wholesale trade, consumer credit, Sprint's 4G plans unveiled

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