US STOCKS-Futures rebound after less harsh Western sanctions on Russia

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* Futures up: Dow 0.7%, S&P 0.8%, Nasdaq 1.2%

By Susan Mathew

Feb 23 (Reuters) - U.S. stock index futures rose on Wednesday, as investors kept a close watch on the rapidly developing situation in the Russia-Ukraine crisis following a softer-than-expected initial sanctions by the Western nations against Moscow.

The three major indexes were poised for a higher open after a four-session losing streak for the Dow and the Nasdaq .

The S&P 500 is set to bounce after ending the previous session more than 10% below its January peak, confirming a correction.

After Moscow deployed troops in separatist regions of eastern Ukraine, the United States, the European Union, Britain, Australia, Canada and Japan responded with plans to target banks and elites, while Germany froze a major gas pipeline project from Russia.

"It was not as harsh as they had been sort of indicating. It almost seemed like more of a warning than anything else because they do not seem to go far enough," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

Western powers have warned of scaling up sanctions if Russia launches an all-out invasion of its neighbor in one of the worst security crises in Europe in decades.

"Investors are looking at the S&P 500 entering the correction territory and using that as an opportunity to step up and try to find some bargains," Pavlik said.

Mega-cap growth stocks Apple Inc, Meta Platforms , Microsoft Corp, Amazon.com Inc and Google-owner Alphabet Inc added between 0.7% and 1.1% in premarket trading.

Tesla Inc gained 1.9% as the electric-car maker plans to expand parts production at its Shanghai factory to meet growing demand for exports.

Shares of big banks rose with Wells Fargo and Morgan Stanley up more than 1% each.

At 7:54 a.m. ET, Dow e-minis were up 225 points, or 0.67%, S&P 500 e-minis were up 34 points, or 0.79%, and Nasdaq 100 e-minis were up 164.75 points, or 1.19%.

U.S. stocks have had a turbulent start to 2022 as worsening geopolitical tensions hurt investor sentiment already dented by worries about aggressive policy tightening by the Federal Reserve to combat inflation.

Diamondback Energy Inc rose 2.6% after the U.S. shale oil producer reported upbeat fourth-quarter profit and boosted its dividend as fuel prices hit multi-year highs on stronger energy demand.

Mosaic Co fell 5.4% after the fertilizer maker posted downbeat quarterly results.

Lowe's Cos Inc added 2.6% after the home improvement chain raised its full-year sales and profit forecasts. (Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Arun Koyyur)