Wall St. up on Greece optimism, fading rate hike fears

(Reuters) - U.S. stocks erased earlier losses to turn positive on Tuesday afternoon amid optimism that Greece would strike a deal with its creditors, while weak U.S. data and bearish comments from a Federal Reserve board member allayed fears of a near-term rate hike.

News that Greece's creditors are close to finishing a draft agreement to put to the leftist government in Athens pushed the dollar to its biggest one-day loss against the euro since mid-March.

New orders for U.S. factory goods unexpectedly fell in April as demand for transportation equipment and other goods weakened ? the latest data that suggest the economy might not be bouncing back strongly enough after a first-quarter slump, to permit a rate hike earlier rather than later in the year.

The economy's recent poor performance may be more than transitory, as the full impact of weak consumer spending, low investment and the high value of the dollar become apparent, Fed board member Lael Brainard said.

"Interest rates are not going to matter if they're rising because of the strong economy and earnings growth, and we're not seeing evidence of either," said Warren West, head trader at Greentree Brokerage Services in Philadelphia.

"So, we're stuck in the lateral type of pattern until we get some clarity on the broader economy."

At 13:04 p.m. ET (1704 GMT) the Dow Jones industrial average was up 42.14 points, or 0.23 percent, at 18,082.51, the S&P 500 was up 5.01 points, or 0.24 percent, at 2,116.74 and the Nasdaq Composite was up 15.03 points, or 0.3 percent, at 5,097.96.

Seven of the 10 major S&P 500 indexes were higher The energy index's 0.91 percent increase led the gains as oil prices dropped in response to a weaker dollar. The utilities index fell 1.57 percent as U.S. 10-Year Treasury yield popped up 2.25 pct.

Intel dropped 1.7 percent to $33.34 and was the biggest drag on the three major indexes after BMO downgraded the stock saying it didn't like the costly Altera deal.

Airline stocks were down 0.97 percent after reports of a multiple bomb threats against U.S. aircraft and Delta's weak forecast. Delta was down 2.5 percent at $43.26.

Juno Therapeutics jumped 13.6 percent to $60.29 after Bloomberg reported that AstraZeneca would consider buying a company such as Juno.

PVH Corp rose 8.4 percent to $113.47 and was the top gainer on the S&P 500 index after the apparel maker reported better-than-expected quarterly results and raised its full-year profit forecast.

Advancing issues outnumbered decliners on the NYSE by 1,787 to 1,176, for a 1.52-to-1 ratio on the upside. On the Nasdaq, 1,855 issues rose and 810 fell for a 2.29-to-1 ratio favoring advancers.

The S&P 500 index showed two new 52-week highs and one new low, while the Nasdaq recorded 69 new highs and 36 new lows.

(Corrects to fix typo in first paragraph)

(Editing by Savio D'Souza)