* HP climbs after earnings, outlook
* German business morale jumps, fastest pace in over 2 years
* S&P on pace for first weekly loss of year
* Futures up: Dow 60 pts, S&P 7.5 pts, Nasdaq 10.75 pts
NEW YORK, Feb 22 (Reuters) - U.S. stock index futures rose on Friday, indicating the S&P 500 would rebound after two days of declines, boosted by better-than-expected earnings from Hewlett-Packard and positive economic data from Europe.
The S&P 500 has dropped 1.9 percent over the past two sessions, its worst two-day drop since early November, putting the index on pace for its first weekly decline of the year. The retreat was triggered by minutes from the Federal Reserve's January meeting released earlier in the week which suggested stimulus measures may end earlier than thought.
Still, the index is up more than 5 percent for the year and has held the 1,500 support level.
"This market sort of hit an air pocket after such a steady climb up, but really not much has changed - you are a little bit closer to the sequester vote and you do have the Fed minutes pointing out that eventually, they are not going to be able to continue to ease, which is not exactly new news to anyone," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
"Today, you have Hewlett-Packard's earnings which is going to take some of the pressure off the technology stocks and you are seeing the return of the upward momentum that has driven this market since the beginning of the year."
Hewlett-Packard Co climbed 5.2 percent to $17.99 in premarket trading after the No. 1 personal computer maker's quarterly revenue and forecasts beat Wall Street expectations as it continued to cut costs under CEO Meg Whitman's turnaround plan.
The sequestration - automatic across-the-board spending cuts put in place as part of a larger congressional budget fight - are due to kick in March 1 unless lawmakers agree on an alternative.
The German Ifo business climate indicator for February rose to 107.4, its best one-month rise in more than two years, boosting optimism after Thursday's disappointing PMI data stoked concerns over the euro zone economy.
S&P 500 futures rose 7.5 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 60 points, and Nasdaq 100 futures added 10.75 points.
Abercrombie & Fitch climbed 4.1 percent to $51.05 before the opening bell after the apparel retailer posted fourth-quarter earnings and provided its 2013 outlook.
Insurer American International Group Inc reported fourth-quarter results that beat analysts' expectations, although Chief Executive Robert Benmosche said some employee bonuses will be smaller this year because the company did not meet all of its performance targets. Shares advanced 3.8 percent to $38.68 in premarket trading.
Marvell Technology Group Ltd rose 4.5 percent to $9.90 in premarket trade after the chipmaker forecast results this quarter that were largely above analysts' expectations as it gained market share in the hard-disk drive and flash-storage businesses.
Fellow chipmaker Texas Instruments Inc raised its quarterly dividend by a third and said it would buy back an additional $5 billion in stock.
According to Thomson Reuters data through Thursday morning, of 427 companies in the S&P 500 that have reported results, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.
European shares were higher, led by miners, on expectations that worries over the result of Italy's election this weekend would be short-lived.
Asian shares recouped some of the previous session's steep falls as investors reassessed concerns that the Federal Reserve may end its ultra-soft monetary policy earlier than expected, but weak U.S. and European data capped Friday's recovery.