Wall Street to open slightly higher after sell-off; Europe eyed

NEW YORK (Reuters) - Stocks were set for a slightly higher open on Tuesday, but caution prevailed as a Spanish bill auction met with falling demand and investors kept their focus on the euro zone debt crisis ahead of a summit later in the week.

Flagging optimism about the summit this week sent stocks lower in the prior session to put the S&P 500 near break-even for June, giving investors little cause to buy riskier assets.

"There is not a reason in the world to buy the market this morning, certainly nothing in the overnight that would suggest there is any kind of a good foundational reason to buy the market - even an oversold condition," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

Spain's short-term borrowing costs nearly tripled at auction when the country sold 3.08 billion euros of its short-term debt, as the Treasury paid the highest rates to sell the paper since November.

Finance chiefs of the euro zone's four biggest economies will hold last-minute talks in Paris on Tuesday evening to discuss managing the crisis in the short term and proposals for closer long-term fiscal and banking integration in preparation for the summit on Thursday and Friday.

According to a document prepared for the meeting, European leaders will discuss specific steps toward a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund.

European shares were up slightly, with the FTSEurofirst 300 index <.FTEU3> adding 0.2 percent. <.EU>

Cyprus became the latest euro zone member to ask for an aid package on Monday, adding to concerns about European leaders' ability to handle the crisis.

S&P 500 futures rose 2.6 points and were just 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 futures rose 9 points, and Nasdaq 100 futures added 5 points.

The S&P/Case Shiller composite index of 20 metropolitan areas showed single-family home prices gained 0.7 percent on a seasonally adjusted basis in April, the third climb in a row, topping economists' expectations of 0.4 percent.

At 10 a.m., the Conference Board releases its June consumer confidence report. Economists in a Reuters survey expect the main index to read 63.5 compared with 64.9 in May.

Goldman Sachs added JPMorgan Chase & Co to its America's conviction buy list, citing the bank's capital and earnings power and downgraded Morgan Stanley to "neutral" from "buy," and removed the stock from its conviction buy list, saying earnings could be hurt by muted capital market activity.

Morgan Stanley lost 1.5 percent to $13.20 and JP Morgan Chase & Co gained 1.1 percent to $35.69 in premarket trade.

Rupert Murdoch's News Corp is thinking of splitting into two companies, the Wall Street Journal reported, citing people familiar with the situation. Shares jumped 7 percent to $21.49 in premarket.

(Reporting by Chuck Mikolajczak; Editing by Dave Zimmerman)

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