US STOCKS-Wall Street set to open higher as post-Christmas rally continues

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* Futures rise: Dow 0.43 pct, S&P 0.38 pct, Nasdaq 0.23 pct

* China permits U.S. rice imports in 'goodwill gesture'

By Medha Singh

Dec 28 (Reuters) - Wall Street was set to open slightlyhigher on Friday, extending a two-day rally amid volatiletrading and raising hopes that the recent selloff may have easedfor now.

The three main index futures rose more than 1 percent beforeparing some gains.

At 8:38 a.m. ET, Dow e-minis 1YMc1 were up 0.43 percent.S&P 500 e-minis ESc1 were up 0.38 percent and Nasdaq 100e-minis NQc1 were up 0.23 percent.

The final week of 2018 has seen wild swings in equities,with the CBOE Volatility Index .VIX , Wall Street's main feargauge, hitting its highest level since early February beforeeasing slightly.

The benchmark S&P 500 tested its 20-month low early in theweek and was at the brink of bear market territory before thethree main indexes roared back with their biggest daily surge innearly a decade on Wednesday and a late rally the following day.

On Thursday, the S&P fell as much as 2.8 percent but closed0.8 percent higher as markets turned around late in the session.

In a sign of optimism on trade on Friday, China opened thedoor to imports of rice from the United States for the firsttime ever in the run-up to talks between the two countries inJanuary. urn:newsml:reuters.com:*:nL3N1YX2AY

"Yesterday's reversal suggests the market has made atemporary bottom and we could probably rally well into the newyear," said Peter Cardillo, chief market economist at SpartanCapital Securities in New York.

"In spite of the government shutdown, the market seems moreconcerned on trade talks, which are somewhat lifting thenegative sentiment."

Stocks could swing between gains and losses due to thevolatility but end-of-the-year window dressing and investorslooking to buy stocks at attractive valuations should end in apositive session, Cardillo said.

Heavyweight technology names including Microsoft CorpMSFT.O , Apple IncAAPL.O and Amazon.com IncAMZN.O - whichwere among the biggest boosts to Wall Street's rally on Thursday- rose more than 0.5 percent in premarket trading.

Of the 30 Dow components, 29 were trading higher.

The three indexes are set to end the week with gains of morethan 3 percent each, snapping three straight weeks of steeplosses.

Still, the indexes are down more than 9 percent for Decemberand remain on track for their biggest annual percentage dropsince 2008.

Investors head into 2019 with a list of worries ranging fromU.S.-China trade tensions, rising interest rates and a coolingeconomy to a partial U.S. government shutdown, which is now inits sixth day. (Reporting by Medha Singh in Bengaluru; Editing by AnilD'Silva) ((Medha.Singh@thomsonreuters.com; within U.S. +1646 223 8780,outside U.S. +91 80 6749 1130; Reuters Messaging:medha.singh.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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