March 24 (Reuters) - U.S. stock index futures were down 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.
Earlier on Monday, Trump postponed a threat to bomb Iran's power grid because of what he described as "productive talks" with unidentified Iranian officials.
Iran's parliament speaker, Mohammad Baqer Qalibaf - identified by an Israeli official
and two other sources as a key interlocutor for Tehran - said no negotiations with the United States had taken place.
Israeli officials said on Tuesday that Trump wants a deal with Iran but the success of any potential talks was unlikely.
Investors initially drew 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," said Deutsche Bank analysts led by Jim Reid.
"Much now depends on the progress of any talks, and whether the more optimistic rhetoric is followed up by concrete action."
At 05:21 a.m. ET on Tuesday, Dow E-minis were down 184 points, or 0.4%, S&P 500 E-minis were down 25.25 points, or 0.38%, and Nasdaq 100 E-minis were down 83 points, or 0.34%.
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 economic calendar, 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 8.2% in premarket trading after the Financial Times reported Japan's Sumitomo Mitsui Financial Group is working on plans for a possible takeover of the investment bank.
Shares of Battalion Oil fell roughly 5% year-on-year after the energy producer reported lower revenue in the fourth quarter.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips)
