Wall Street gains on data; euro zone caution remains

NEW YORK (Reuters) - Stocks rose on Wednesday on upbeat economic data, but concerns about the pace of the recovery and expectations that another meeting of European leaders would do little to solve the region's debt crisis kept gains vulnerable.

Demand for long-lasting manufactured goods rose sharply more than expected in May and contracts to buy homes on resale matched a two-year high.

The PHLX housing sector index <.HGX> rose 3.6 percent, taking the year-to-day gains to near 26 percent. Shares of Lennar Corp rose 4.7 percent to $28.69 after the U.S. homebuilder reported a rise in new orders for the fifth straight quarter.

"Today's figure is the last of the May housing data seen over the past week and signs still point to an industry trying to keep its head above water after a miserable five years," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

"Getting out of the water though will still take a lot of patience and time."

The Dow Jones industrial average <.DJI> was up 76.25 points, or 0.61 percent, at 12,610.92. The Standard & Poor's 500 Index <.SPX> was up 10.41 points, or 0.79 percent, at 1,330.40. The Nasdaq Composite Index <.IXIC> was up 21.32 points, or 0.75 percent, at 2,875.38.

Few anticipate anything concrete to emerge from the two-day European Union meeting that kicks off Thursday after German Chancellor Angela Merkel said debt sharing, an idea backed by France, Italy and Spain, would not happen in her lifetime.

Markets have anxiously waited for tangible action to contain the credit crisis in Europe. With Spanish 10-year yields near the 7 percent level, the euro zone's fourth-largest economy appears set to be the next country to seek a bailout after getting approval for money to recapitalize its banks. Greece, Portugal, Ireland and Cyprus already have asked for financial help.

Some of Wall Street's top analysts have published their research on Facebook Inc and most are cautiously optimistic. Facebook shares fell 1 percent to $32.77 after gaining more than 20 percent in the past two weeks.

A U.S. judge on Tuesday backed Apple's request to stop Samsung <005930.KS> selling its Galaxy Tab 10.1 tablet in the United States, giving the iPhone maker a significant win in the global smartphone and tablet patent wars. Apple shares edged 0.6 percent higher.

Google shares gained 1.4 percent to $572.58 after reports the company will soon unveil a tablet co-branded with Taiwan's Asustek Computer <2357.TW> and priced to compete with Amazon's Kindle Fire.

Shares of O-Reilly Automotive tumbled 14.7 percent to $82.18 a day after the auto parts retailer revised its outlook.

(Reporting by Angela Moon, editing by Dave Zimmerman)

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