* Stocks rise on glimmer of hope in U.S. home sales data
* U.S. Treasury prices fall on issuance concerns
* Dollar falls vs euro after jump in housing data
* Oil edges higher on suggestion OPEC may cut supply more
NEW YORK, Feb 3 (Reuters) - A rebound in pending sales of
existing U.S. homes bolstered equity markets and eased safe
haven demand for the dollar on Tuesday, but U.S. Treasury bond
prices fell sharply on worries about surging debt issuance.
A sell-off in U.S. government debt markets accelerated,
driving up U.S. Treasury bill rates to their highest levels
since November ahead of another debt auction.
Oil climbed toward $41 a barrel after the Organization of
Petroleum Exporting Countries signaled it might cut supply
further to help boost prices and drain bloated stockpiles.
U.S. stocks struggled to stay positive. But data showed
pending U.S. home sales rose 6.3 percent in December for the
first time since August, boosting enthusiasm and offsetting a 5
percent decline in bank shares over fears the government may
have to nationalize some or all of the sector.
Bank of America Corp's <BAC.N> shares fell 9.3 percent,
while Citigroup Inc <C.N> fell 4.1 percent.
Strong earnings at drugmaker Merck <MRK.N> helped temper
worries amid an otherwise gloomy corporate earnings season.
Philippe Gijsels, strategist at Fortis Bank in Brussels,
said corporate news will remain bad in a bear market, but the
housing data offers a "glimmer of hope."
"It's good to see positive news flow from the U.S. housing
markets. This is encouraging as markets seem to react again to
good news," he said.
News that the U.S. Federal Reserve extended agreements with
several other central banks to meet a global demand for dollars
as policy-makers try to keep credit flowing also boosted market
sentiment, although it showed credit remains tight.
"The Fed is extending liquidity programs and telling you in
the same breath that conditions remain quite strained," said
Craig Peckham, equity trading strategist for Jefferies & Co in
New York.
Still, Peckham said "we have a lot of investors desperately
looking for signs that fundamental improvement is on the
horizon."
The Dow Jones industrial average <> rose 21.18 points,
or 0.27 percent, to 7,958.01. The Standard & Poor's 500 Index
<.SPX> gained 1.16 points, or 0.14 percent, at 826.60. The
Nasdaq Composite Index <> fell 1.51 points, or 0.10
percent, to 1,492.92.
The FTSEurofirst 300 <> index of top European shares
closed 1.88 percent higher at 791.61 after having been down as
much as 0.9 percent. It fell 2.4 percent the previous session.
Vodafone <VOD.L>, the world's No. 1 mobile phone group by
sales, led telecoms higher in Europe after it raised its 2009
guidance on favorable foreign exchange movements and said
customers are using their mobiles more despite the downturn.
Slightly better-than-expected third-quarter revenue
forecasts at Vodafone lifted its shares about 7 percent.
U.S. light sweet crude oil <CLc1> rose 11 cents to $40.19 a
barrel.
OPEC President Jose Botelho de Vasconcelos, the Angolan oil
minister, told Reuters the group could take more action when it
meets March 15. An OPEC source later said the group may discuss
a further cut of about 1 million barrels a day.
"Prices do seem to have bottomed for now," said Kevin
Norrish of Barclays Capital. "OPEC has probably taken more than
enough off the market and there's a risk of over-tightening, in
which case prices would go back up fairly swiftly."
Gains in the euro were limited as many investors awaited
the ECB's policy-making meeting on Thursday, when it is widely
expected to leave interest rates on hold at 2 percent.
The euro <EUR=> rose 0.75 percent to $1.2945. Against the
yen, the dollar <JPY=> fell 0.35 percent to 89.15.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> down 0.82 percent at 85.402.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
27/32 in price to yield 2.82 percent. The 2-year U.S. Treasury
note <US2YT=RR> fell 3/32 in price to yield 0.95 percent.
An announcement by the Bank of Japan of a plan to buy up to
1 trillion yen ($11 billion) in listed shares held by Japanese
banks also helped boost sentiment earlier, but its impact may
be limited, analysts said.
The housing report "is a real shot in the arm for (risk)
sentiment," said Brian Dolan, chief currency strategist at
Forex.com, in Bedminster, New Jersey.
Spot gold prices <XAU=> fell $5.85 to $895.40 an ounce.
The MSCI index of stocks in Asia-Pacific excluding Japan
<.MIAPJ0000PUS> rose 1.2 percent. But Japan's Nikkei share
average <> fell 0.6 percent after rising as much as 2
percent, as fears about corporate results plagued investors.
(Reporting by Vivianne Rodrigues and John Parry in New York;
George Matlock, Peg Mackey in London and Christoph Steitz in
Frankfurt, writing by Herbert Lash, Editing by Chizu Nomiyama)
