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* Futures: Dow 0.92%, S&P 500 0.89%, Nasdaq 0.84%

March 31 (Reuters) - U.S. stock index futures gained on

Tuesday, as markets welcomed a report signaling a potential

de-escalation in the Middle East conflict that has set the S&P

500 and the Dow for their biggest monthly decline in years.

The Wall Street Journal on Monday reported that U.S.

President Donald Trump told aides he was willing to end the

military campaign against Iran even if the Strait of Hormuz

remained largely closed.

The report soothed some market nerves after a month-long

conflict that has battered global markets and left the S&P 500

and the Dow on track for their biggest monthly falls since

September 2022.

Oil prices were volatile on Tuesday, but were headed for a

record monthly gain. The S&P 500 energy index has gained

over 11% so far in March, the only sector set to end the month

in the positive territory.

The Dow and the Nasdaq last week ended 10% below their

record high closes, confirming a correction. The small-cap

Russell 2000 confirmed it earlier this month.

Isabella Mateos Y Lago, an economist at BNP Paribas, said

investors were not expecting the war to cause meaningful damage

to growth, with many analysts sticking to their pre-war end-2026

U.S. index targets, and making little downgrades to earnings

forecasts, as cash holdings remained below Trump's tariff

announcement levels.

"As long as the possibility of scenarios that inflict only

manageable growth costs persists, it is preferable that

financial markets do not amplify headwinds from higher energy

prices and more hawkish central banks."

At 05:08 a.m. ET, Dow E-minis were up 417 points, or

0.92%, S&P 500 E-minis were up 57 points, or 0.89% and

Nasdaq 100 E-minis were up 194.25 points, or 0.84%.

Investors will also watch out for the job openings and labor

turnover survey (JOLTS) for February, the first of the labor

market reports due in the holiday-shortened week.

Comments from Fed policymakers, including Austan Goolsbee

and Michelle Bowman, will also be parsed for any clues on the

Federal Reserve's monetary policy path after Chair Jerome Powell

said on Monday the Fed can wait to assess the impact from the

war.

The oil spike stemming from the Iran conflict has revived

inflation worries, prompting money market participants to price

out any easing from the Fed this year, compared with two cuts

that they had expected before the war broke out, per CME Group's

FedWatch Tool.

Among premarket movers, McCormick ( MKC ) shares gained 4.2%

after Unilever ( UL ) said it was in advanced talks to combine

its food business with the spice maker.

Emerson Electric ( EMR ) was up 2.2% after Jefferies assumed

coverage of the stock with a "buy" rating.

(Reporting by Purvi Agarwal in Bengaluru; Editing by Shinjini

Ganguli)