* Citigroup jumps on smaller-than-expected loss

* Google, Microsoft, Merrill disappoint on earnings

* Oil reverses steep 3-day slide, turns higher

* Report Freddie Mac mulling $10 bln stock sale (Updates with futures erasing losses to trade flat, adds details throughout)

By Ellis Mnyandu

NEW YORK, July 18 (Reuters) - U.S. stock index futures were little changed on Friday as No. 1 U.S. bank Citigroup (C.N: Quote, Profile, Research) reported a smaller-than-expected quarterly loss, offsetting disappointing results from Merrill Lynch MER.N and two technology bellwethers.

Shares of Citigroup rose more than 5 percent before the bell after the Dow component reported a 54 cents per share loss compared with an expected loss of 67 cents. For details, see [ID:nN18431251].

The positive news from Citi, following a day after reassuring financial results from No. 3 U.S. bank JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), helped European stocks and the dollar to rise and could give investors an incentive to snap up bargains in the embattled financial sector.

"With Citigroup reporting a smaller-than-expected loss, it appears the worst may be over in the subprime mess. So when you look at these bank companies, they look like they are OK," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.