Housing leads Wall Street rebound, Europe eyed

NEW YORK (Reuters) - Housing shares led a rebound by stocks on Tuesday after upbeat data on home prices, but the outlook was clouded by doubts about a summit on the European debt crisis this week.

Major U.S. stock indexes recovered part of Monday's losses of more than 1 percent. However, an air of caution remained as Spanish borrowing costs jumped and U.S. consumer confidence fell to its lowest in five months in June.

"Certainly in the United States stocks are nicely priced, and for a long-term investor it is an attractive entry point, but then what about this macro risks hovering around the market? I think it's having a dampening effect," said John De Clue, regional investment director at U.S. Bank Wealth Management in Minneapolis.

Spanish bond yields rose after demand at a bill sale fell despite significantly higher yields as hopes faded that the European Union summit later this week would produce game-changing crisis measures. Madrid formally asked on Monday for funds to bail out its banks in a move some see as a prelude for a full-blown bailout of the euro zone's fourth-largest economy.

The Dow Jones industrial average <.DJI> rose 62.10 points, or 0.50 percent, to 12,564.76. The S&P 500 Index <.SPX> gained 8.84 points, or 0.67 percent, to 1,322.56. The Nasdaq Composite <.IXIC> added 20.68 points, or 0.73 percent, to 2,856.84.

The PHLX housing index <.HGX> jumped 3.1 percent after S&P/Case Shiller data showed home prices in 20 metropolitan areas gained 0.7 percent on a seasonally adjusted basis, topping economists' expectations for a 0.4 percent gain.

Energy shares led gains on the S&P 500, boosted by a jump of more than 2 percent jump in Brent crude prices. A strike by Norwegian oil workers threatened to tighten North Sea crude supply.

JPMorgan Chase & Co shares rose 1.4 percent to $35.83 after Goldman Sachs added the bank to its conviction buy list. Morgan Stanley , cut to "neutral" by Goldman, added 1.2 percent to $13.64.

Rupert Murdoch's News Corp said it was considering splitting into two publicly traded companies, and sources familiar with the matter said publishing would be separated from entertainment. Its shares jumped 6.2 percent to $21.35.

Facebook shares jumped 3 percent to $33.03 a day before the underwriters of the social network site's recent IPO can make public their research on the company.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

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