US STOCKS-Banks, techs set stocks up for best month in 6 years

                                
 * Banks rise on Barclays, Fortis news
                                
 * Home prices drop in January, Midwest business shrinks
                                
 * Dow up 1.8 pct, S&P up 2 pct, Nasdaq up 2.5 pct
                                
 * For up-to-the-minute market news click STXNEWS/US
 (Updates to early afternoon, changes byline)
                                
 By Rodrigo Campos
                                
 NEW YORK, March 31 (Reuters) - U.S. stocks rose on
Tuesday, setting the stage for the market's best month in six
years as positive news from European financial institutions
lifted bank shares and Microsoft <MSFT.O> jumped following a
broker's upgrade.
                                
 Major U.S. banks rose on improving sentiment after
Barclays <BARC.L> declined to take part in a British
government asset-protection plan and Fortis <FOR.BR> outlined
its future as a viable insurance group following a 2008 loss
of 28 billion euros.
                                
 After Monday's sharp sell-off in banking shares, JPMorgan
Chase <JPM.N> rose 6.4 percent to $26.45, while Bank of
America shares <BAC.N> jumped 9.3 percent to $6.59.
                                
 "We are seeing some positive news here from Barclays and
Fortis," said Tim Ghriskey, chief investment officer at
Solaris Asset Management in New York.
                                
 "People believe there are bargains in financials. And as
the industry begins to right itself, we could see some good
earnings coming out of the banks. I think that is causing more
buying in the sector."
                                
 Technology shares also helped drive the market's gains as
brokerage Davenport upgraded Microsoft Corp to "buy" from
"neutral," citing increased demand for personal computers in
China and the United States, and potential restocking of
inventories in Europe.
                                
 Microsoft shares added 6.5 percent to $18.61 and
contributed the most to the Nasdaq's advance.
                                
 The Dow Jones industrial average <.DJI> gained 138.43
points, or 1.84 percent, to 7,660.45. The Standard & Poor's
500 Index <.SPX> rose 15.64 points, or 1.99 percent, to
803.17. The Nasdaq Composite Index <.IXIC> added 37.69 points,
or 2.51 percent, to 1,539.49.
                                
 The broad S&P 500 was on track to end March as the best
month since April 2003 after a rally that has driven stocks upmore than 17 percent from 12-year lows hit on March 9.
                                
 The S&P financial index <.GSPF> rose 6.1 percent, bouncing
back from a sell-off on Monday when it was hurt by anxiety
over the banking sector's health.
                                
 Alcoa <AA.N> shares shot up 11.4 percent to $7.45 after
Deutsche Bank upgraded the aluminum company's stock to "hold"
from "sell" and raised its price target.
                                
 And on Nasdaq, shares of Autodesk <ADSK.O> shot up 13.6percent to $17.31 after UBS upgraded the design software and
services company.
                                
 On the economic front, the picture remained dark although
investors appeared to pay scant attention to the data. Prices
of U.S. single-family homes dropped a record 19 percent in
January from a year earlier, while March U.S. consumer
confidence came in barely above the record monthly low.
[ID:nN31416180]
                                
 The Institute for Supply Management-Chicago index of
business activity fell in March at a rate that was more severe
than expected. [ID:nN31408630]
 (Editing by Jan Paschal)