US STOCKS-Futures hold gains after benign inflation data

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* Core PCE rises 0.2 percent in December

* U.S. manufacturing activity data at 10 am ET

* Gap soars after analysts praise Old Navy split

* Foot Locker jumps on Q4 same-store sales beat

* Futures rise: Dow 0.61 pct, S&P 0.56 pct, Nasdaq 0.65 pct (Adds comments, details, updates prices)

By Shreyashi Sanyal

March 1 (Reuters) - U.S. stock index futures were higher on Friday, setting up Wall Street’s main indexes for a higher open, after data showed inflation remained benign in December.

The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure, rose 0.2 percent, after excluding volatile food and energy components, following a similar gain in November.

Investors are also awaiting the Institute for Supply Management (ISM) survey on U.S. manufacturing activity for February which is expected to have slowed slightly from January.

Earlier, a private survey showed China’s factory activity contracted for a third straight month in February but at a slower pace, helping lift global equities.

“It’s a China type day which is giving investors confidence that all is well in China and that fear is probably off the table,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

The Commerce Department said U.S. personal income fell for the first time in more than three years in January, pointing to a moderate growth in consumer spending.

At 8:50 a.m. ET, Dow e-minis were up 159 points, or 0.61 percent. S&P 500 e-minis were up 15.5 points, or 0.56 percent and Nasdaq 100 e-minis were up 46.25 points, or 0.65 percent.

Wall Street’s main indexes closed slightly lower on Thursday as support from better-than-feared U.S. GDP data was countered by concerns about earnings and U.S.-China trade relations.

The benchmark S&P 500 index has risen 11 percent since the beginning of the year, bolstered by progress in trade talks and the Federal Reserve’s cautious stance on interest rates.

After President Donald Trump delayed a deadline that would have triggered higher tariffs on Chinese imports, Bloomberg reported on Thursday afternoon that a summit between Trump and his Chinese counterpart Xi Jinping to sign for a final trade deal could happen as soon as mid-March.

Among shares trading premarket, Gap Inc surged 20.5 percent after the company said it would separate its better-performing Old Navy brand and shutter about 230 stores of its struggling namesake apparel business.

Foot Locker jumped 12.7 percent after the footwear retailer reported quarterly same store sales above analysts’ expectations. Its partner Nike Inc’s shares rose about 1.2 percent.

Tesla Inc fell 4.1 percent after the electric automaker said it would not be profitable in the first quarter. (Reporting by Shreyashi Sanyal and Medha Singh in Bengaluru; Editing by Anil D’Silva)