Stocks set for pre-Fed gains

LONDON (CNNMoney.com) -- U.S. stocks looked set for slight gains Monday, as expectations for the Federal Reserve to cut rates helped offset fresh subprime losses hitting the financial sector.

At 5:02 a.m. ET, Nasdaq and S&P futures had turned higher, pointing to a flat to positive start for stocks.

Investors are eagerly anticipating the Fed policy meeting on Tuesday. The central bank is widely expected to cut rates, although the market is divided over whether it will lower rates by a quarter of a percentage point or half of a percentage point.

The prospect of a rate cut from the Fed offset a warning from Swiss bank UBS (Charts), which said Monday it may face a full-year loss due to an additional $10 billion writedown on its subprime holdings. Despite the news, investors took comfort in the $11.5 billion injection the bank said it received from outside investors.

Stocks to watch Monday include Citigroup (Charts, Fortune 500), whose board is meeting to discuss a potential successor for recently departed CEO Chuck Prince, according to published reports.

In global trade, major Asia markets ended the session lower, and European stocks were mixed in the early going.