(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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Futures down: Dow 0.8%, S&P 500 1.1%, Nasdaq 1.4%

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PepsiCo ( PEP ) gains after report says Elliott plans activist

campaign

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Gold miners gain as bullion prices hit record high

(Updates before markets open)

By Purvi Agarwal and Ragini Mathur

Sept 2 (Reuters) - U.S. stock index futures pointed to a

lower open on Tuesday, as investors returning from a long

holiday weekend worried about the legality of President Donald

Trump's tariffs and awaited crucial economic reports.

A divided U.S. appeals court ruled on Friday that most

of Trump's tariffs are

illegal

, undercutting the U.S. president's use of these levies as a

key international economic policy tool.

However, the court allowed for the tariffs to be in

place until October 14 to give the administration a chance to

file an appeal with the Supreme Court.

Yields on longer-dated U.S. Treasuries rose on Tuesday,

with those on the 10-year and 30-year

notes at their highest levels in more than a month, pressuring

equities.

The CBOE Market Volatility index also touched its

highest mark in more than three weeks and was last up 2.77

points at 18.89.

"If the Supreme Court rules the tariffs to be illegal,

the government has to pay all that money back ... if there's

more debt, yields will rise higher, which means more trouble for

the market," said Robert Pavlik, senior portfolio manager at

Dakota Wealth.

At 8:46 a.m. ET, Dow E-minis were down 396

points, or 0.87%, S&P 500 E-minis were down 71.5 points,

or 1.1% and Nasdaq 100 E-minis were down 331.5 points,

or 1.41%.

Meanwhile, caution also prevailed ahead of the August

nonfarm payrolls report, due on Friday, which will follow a

monthly private payrolls reading and job openings figures.

Markets are pricing in about a 92% chance of a

25-basis-point cut in interest rates at the Fed's meeting later

this month, according to the CME Group's FedWatch tool.

Investors' dovish tilt came after July's weak job report,

with Fed Chair Jerome Powell acknowledging the growing risks to

the labor market at the Jackson Hole symposium, helping the S&P

500 and the Dow log their fourth consecutive month of gains in

August.

The Nasdaq logged its fifth straight monthly gain last

month.

Meanwhile, hedge funds remained hesitant about buying U.S.

stocks at the outset of seasonally dour September, according to

Goldman Sachs data up to August 25.

The benchmark S&P 500 has lost 1.5% on average in September

- its worst month - since 2000, according to data compiled by

LSEG. DataTrek Research said it is the only month since 1958

where the index's mean returns are negative.

On Tuesday, U.S. manufacturing activity data for August is

due after markets open.

A White House official said that Trump would make an

announcement related to the U.S. defense department later in the

day.

In stocks, gold miners gained in premarket trading after

bullion prices hit a record high. U.S.-listed shares of Harmony

Gold rose 6.2%, Kinross Gold gained 2.4% and

Newmont ( NEM ) added 1.4%.

PepsiCo ( PEP ) shares gained 4.8% after a report by the

Wall Street Journal said Elliott Management had taken a $4

billion stake in the beverages giant and was planning an

activist campaign.

Quarterly earnings from retailers this week will also be

on the radar.