Wall Street higher but Facebook weighs

NEW YORK (Reuters) - Wall Street rose on Tuesday on renewed hopes Greece will stay in the euro zone, but indexes cut gains in half as Facebook hit a new low.

Greek election polls pointed to support for pro-bailout parties in June 17's elections, helping to calm fears Greece would leave the euro zone and threaten more turmoil in the financial system.

Facebook Inc shares hit a new low of $29.23, with losses accelerating after falling through the $30 per share barrier.

The stock fell on talk Facebook was in discussions to buy Oslo-based Opera Software . Analysts said competition from Google Inc and others could push the price tag of any deal above $1 billion. Shares of the social networking giant have lost about a third of their value since going public earlier this month.

Weekend polls in Greece showed the conservative New Democracy party, which backs the country's international bailout, has a lead over the leftist SYRIZA party.

"There's increasing hope that the more conservative party will win out in Greece, which is enough to spur some buying today," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

He said stocks' rise earlier of 1 percent may have been overdone.

"Since the market seems subject to the news 'de jour' from Europe, our midday pullback seems rational. I couldn't account for why we were up so much before," he said.

In a negative turn for the euro zone, Egan-Jones Ratings cut Spain's credit level for the third time in less than a month as the country's weak banks continue to worry investors.

The Dow Jones industrial average <.DJI> was up 72.69 points, or 0.58 percent, at 12,527.52. The Standard & Poor's 500 Index <.SPX> was up 7.02 points, or 0.53 percent, at 1,324.84. The Nasdaq Composite Index <.IXIC> was up 13.22 points, or 0.47 percent, at 2,850.75.

Investors cited possible new stimulus from China for Wall Street's gains. The Shanghai Securities News, citing unnamed sources, said China's biggest banks appeared to have accelerated lending as Beijing starts to fast-track its approval of infrastructure investments.

Investors shrugged off a private sector report which showed U.S. consumer confidence unexpectedly cooled in May, falling to the lowest level in four months as Americans became more pessimistic about the job market and economic outlook. The report is one of the first in an abbreviated week heavy on economic data, culminating in Friday's payrolls report.

U.S. markets were closed on Monday for the Memorial Day holiday.

The S&P/Case Shiller composite index of U.S. single-family home prices edged 0.1 percent higher in 20 metropolitan areas in March on a seasonally adjusted basis, falling short of economists' forecasts for a gain of 0.2 percent. However, it was the second consecutive month of gains which could indicate stabilization in the housing market.

Vertex Pharmaceuticals Inc dropped 13 percent to $56.67 as the biggest percentage loser on the Nasdaq 100 <.NDX> after the drugmaker released corrected data involving its cystic fibrosis treatments on Tuesday.

Defense equipment manufacturer Teledyne Technologies Inc said it would buy LeCroy Corp for $240.5 million in cash. LeCroy shares surged 55 percent to $14.18 while Teledyne advanced 0.9 percent to $60.40.

(Editing by Kenneth Barry)

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