US STOCKS-Futures flat after two-day decline; Alcoa up early

* S&P 500's 14-day moving average watched as support

* Alcoa (NYSE: AA - news) tops expectations; shares up in premarket

* Citigroup (NYSE: C - news) may pay $7 billion to resolve probe: source

* Dow down 10 pts, S&P down 0.25 pt, Nasdaq up 1 pt

By Ryan Vlastelica

NEW YORK, July 9 (Reuters) - U.S. stock index futures were flat on Wednesday, suggesting that even a positive early read on earnings was not enough to entice buyers after a sharp decline from record levels.

* The S&P 500 is coming off its biggest two-day slump since mid-May, with small-cap and "momentum" names - hyper growth stocks largely in the Internet and biotech space - among the biggest decliners. Despite heavy losses earlier this year, both groups continue to be hit by charges that they are overvalued.

* Alcoa Inc rose 2 percent to $15.14 in premarket trading a day after reporting second-quarter adjusted earnings and revenue that topped expectations.

* While the former Dow component is not considered a market-moving industry bellwether, the aluminum maker is sometimes viewed as setting the tone for the season by dint of being one of the first high-profile names out of the gate. Wells Fargo & Co will report on Friday, while dozens of closely watched companies, including numerous Dow components, will come out next week.

* S&P 500 profits are seen growing 6.2 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3 percent. Analysts are looking to earnings for confirmation that the economy recovered in the second quarter from the impact of a harsh winter.

* S&P 500 e-mini futures fell 0.25 point but were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average e-mini futures fell 10 points, and Nasdaq 100 e-mini futures rose 1 point.

* While the Dow closed back below 17,000 in Tuesday's decline, the S&P recovered from its lows of the session and held near its 14-day moving average. If the benchmark index had ended decisively below that level, it would be a sign of weak near-term momentum. The two-day skid follows a sharp Wall Street rally that took major indexes to repeated records.

* Citigroup Inc is close to paying about $7 billion to resolve a U.S. probe into whether it defrauded investors on billions of dollars worth of mortgage securities in the run-up to the financial crisis, a source familiar with the matter told Reuters late Tuesday.

* A Beijing court has ruled against Apple Inc (NasdaqGS: AAPL - news) by upholding the validity of a patent held by a Chinese company, clearing the way for the Chinese company to continue its own case against Apple for infringing intellectual property rights.

* Cosmo Pharmaceuticals said it would merge its Irish subsidiary with Salix Pharmaceuticals (NasdaqGS: SLXP - news) , the latest in a wave of overseas deal-making by U.S. companies looking to lower their tax bill. (Editing by Lisa Von Ahn)