* Futures: Dow down 0.1%, S&P 500 & Nasdaq flat

* Jefferies gains on report Japan's SMFG plans possible

takeover

* Barclays raises year-end target for S&P 500 to 7,650

from 7,400

(Updates with prices)

By Purvi Agarwal and Twesha Dikshit

March 24 (Reuters) - U.S. stock index futures were muted

on Tuesday after a relief rally in the previous session, as

renewed doubts over easing Middle East tensions weighed on

sentiment despite President Donald Trump's decision to delay

strikes on Iran's power grid.

Iran launched multiple missiles at Israel on Tuesday, the

Israeli military said, despite Trump postponing a threat to bomb

Iran's power grid because of "productive talks" with Iranian

officials. Tehran has said no negotiations with the U.S. have

taken place.

Israeli officials said Trump wants a deal with Iran, but any

talks were unlikely to be successful at this point.

Investors took comfort from Trump's comments, sending Wall

Street's main indexes rallying to more than 1% on Monday, in

their biggest one-day rise since February 6. But the momentum

lost steam as uncertainty over the conflict lingered.

"Iranian officials have repeatedly denied that talks with

the U.S. were even happening, which contributed to markets

reversing some of the initial risk-on reaction late yesterday

and overnight," Deutsche Bank analysts led by Jim Reid said.

"Much now depends on the progress of any talks, and whether

the more optimistic rhetoric is followed up by concrete action."

At 6:44 a.m. ET, Dow E-minis were down 45 points, or

0.1%, S&P 500 E-minis were down 3 points, or 0.05% and

Nasdaq 100 E-minis were up 8.25 points, or 0.03%.

The conflict has driven oil prices sharply higher, reviving

inflation jitters and complicating the interest rate outlook for

central banks. The U.S. Federal Reserve struck a hawkish tone

last week, projecting only one reduction in 2026.

Money markets are no longer pricing in any rate cuts this

year, compared with two reductions expected before the Middle

East conflict erupted. Expectations for hikes nudged higher amid

escalating tensions last week, but were quickly unwound after

Trump's comments on Monday, according to CME's FedWatch Tool.

Last week, all three main U.S. indexes logged their fourth

weekly decline, with the Nasdaq marking its biggest weekly drop

since early February.

On the data front on Tuesday, investors will watch a flash

estimate of S&P Global's gauge of business activity in March,

alongside comments from Fed Governor Michael Barr.

Among individual movers, shares of Jefferies gained

9.8% in premarket trading after the Financial Times reported

that Japan's Sumitomo Mitsui Financial Group ( SMFG ) is working

on plans for a possible takeover of the investment bank.

Shares of Smithfield Foods ( SFD ) rose 9% as the U.S. pork

processor beat analysts' estimates for fourth-quarter sales and

profit.

Dexcom ( DXCM ) gained 3.1% after Evercore ISI upgraded its

rating to "outperform" from "in line".

Barclays lifted its 2026 year-end target for the S&P 500

index on Tuesday to 7,650 from 7,400, citing stronger

earnings expectations that outweigh macro risks like Middle East

tensions, AI-driven disruption and stress in private credit.