* Citigroup falls in premarket, Fed rejects capital plan
* GDP grew 2.6 pct in Q4; jobless claims unexpectedly drop
* BofA to pay $9.3 bln to settle mortgage bond claims
* Futures up: Dow 18 pts, S&P 0.8 pt, Nasdaq 0.5 pt (Updates with GDP and jobless claims data)
By Ryan Vlastelica
NEW YORK, March 27 (Reuters) - U.S. stock index futuresindicated a flat opening on Wall Street Thursday as the latesteconomic data pointed to improving conditions, though investorswere reluctant to make big bets amid tensions in Ukraine and adrop in Citigroup shares.
* Gross domestic product expanded at a 2.6 percent annualrate in the fourth quarter, the Commerce Department said, upfrom the 2.4 percent pace it estimated last month but slightlyunder the 2.7 percent expectation of analysts. In a positivesign for the labor market, jobless claims unexpectedly fell inthe latest week, dropping a near four-month low.
* The data provided encouraging signs on the economy,supporting a theory that weakness seen earlier this year wasrelated to bad weather rather than worsening fundamentals.
* Equities have been volatile this week, driven byfluctuating tensions in the biggest conflict between Russia andthe United States since the Cold War. While data has supportedthe market, investors used the uncertainty over Ukraine as anopportunity to take profits in some of the market's biggestoutperformers, especially in the technology and biotech sectors.
* Citigroup Inc slumped 5.9 percent to $47.18 inpremarket trading a day after the Federal Reserve rejected thebank's plan to buy back $6.4 billion of shares and boostdividends, saying the bank wasn't sufficiently prepared tohandle a potential financial crisis. A source close to thematter told Reuters that Citi officials had not expected therejection.
* Four other banks also had their plans rejected, includingZions Bancorp and the U.S. units of HSBC , RBS and Santander.
* The financial Select Sector SPDR ETF was littlechanged on the day, with the weakness from Citigroup counteredby a 0.8 percent premarket rise in Bank of America. Thestock rose after it agreed to pay $9.3 billion to settle claimsthat it sold Fannie Mae and Freddie Mac faulty mortgage bonds, helping the bank to end one of thelargest legal headaches it still faced from the financialcrisis.
* S&P 500 futures rose 0.8 point but were below fairvalue, a formula that evaluates pricing by taking into accountinterest rates, dividends and time to expiration on thecontract. Dow Jones industrial average futures added 18points and Nasdaq 100 futures rose 0.5 point.
* Geopolitical issues remained in view a day after the U.S.and the European Union agreed to work together to preparepossibly tougher economic sanctions in response to Russia'sannexation of Ukraine's Crimea territory, including on theenergy sector. While Western leaders earlier agreed to hold offon new sanctions unless Moscow takes further destabilizingactions in the region, investors are concerned about thepotential fallout of a prolonged conflict.
* Ukraine won a $27-billion international financial lifelinefrom the International Monetary Fund, rushed through in the wakeof Russia's annexation of Crimea, as Moscow's economy ministerspoke of the cost of military action in its former Sovietneighbors. The credit is in return for tough economic reformsthat will unlock further aid from the European Union, the UnitedStates and other lenders over two years.
* Pending home sales are due out at 10:00 a.m. EDT (1400GMT), with sales expected to have held steady in February.
* Yum Brands Inc, which has heavy exposure to China,said its KFC chain was planning an overhaul of its China menuand launching a publicity drive as it struggled to emerge fromthe shadow of a food-safety scare in 2012.
* Cloud-based payroll processor TriNet Group Inc said it priced its initial public offering at $16 per share,valuing the company at about $1.09 billion. Thestock will begin trading on Thursday, a day after King DigitalEntertainment Plc slumped in its trading debut. Sharesof King rose 1.6 percent to $19.30 in premarket trading. (Editing by Bernadette Baum)