Texas Instruments Inc (TXN.O) will be in focus after it reported better-than-expected fourth-quarter chip sales as customers in a broad array of industries replenished depleted inventories. Texas Instruments shares in Frankfurt (TXN.F) traded up 1.4 percent.

Hard drive maker Western Digital Corp (WDC.N) posted better-than-expected quarterly results and forecast a strong current quarter, signaling a faster-than-anticipated return to production capacity at key facilities damaged by the floods in Thailand last year.

On the economic front, Federal Reserve Bank of Richmond releases January indexes on area manufacturing and service sectors, while a flurry of earnings releases will come from companies including Apple Inc (AAPL.O), AMD (AMD.N), Dupont (DD.N), Johnson & Johnson (JNJ.N), McDonald's (MCD.N), Verizon (VZ.N) and Yahoo Inc (YHOO.O).

The regulator for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) told lawmakers that forcing the government-controlled mortgage firms to write down the principal on underwater home loans would require more than $100 billion in fresh taxpayer funds.

Software maker VMware Inc (VMW.N) reported profit ahead of Wall Street expectations and raised hopes that technology spending would grow this year.

Semiconductor company Semtech Corp (SMTC.O) said on Monday that it planned to buy Canada's Gennum Corp (GND.TO) for about C$500 million ($497 million).

Boeing Co (BA.N) won a $693 million contract modification to build five more C-17 transport planes for the U.S. Air Force, the Pentagon said on Monday.

U.S.-based Watson Pharmaceuticals Inc (WPI.N) said it bought the Australian and South East Asian generic drugs business of India's Strides Arcolab (STAR.NS) for A$375 million ($396 million), boosting Strides' shares by more than 18 percent.

Starbucks Corp (SBUX.O), the world's biggest coffee chain, plans to sell beer and wine in as many as 12 cafes in Atlanta and Southern California by the end of the year.

U.S. stocks finished almost flat on Monday. The Dow Jones industrial average .DJI slipped 11.66 points, or 0.09 percent, to end at 12,708.82. But the Standard & Poor's 500 Index .SPX inched up 0.62 point, or 0.05 percent, to close at 1,316.00. And the Nasdaq Composite Index .IXIC dipped 2.53 points, or 0.09 percent, to end at 2,784.17.

(Reporting by Blaise Robinson; Editing by Will Waterman)

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