US Stocks gain as worries about Greece abate (ext.CNN)

NEW YORK (CNNMoney) -- U.S. stocks rose Tuesday as investors welcomed a lack of negative headlines out of Europe and hopes that China will move to support its economy.

The gains came despite a weaker-than-expected report on U.S. consumer confidence and continued declines in home prices.

The Dow Jones industrial average (INDU) rose 126 points, or 1%, to end at 12,580. The S&P 500 (SPX) added 14 points, or 1.1%, to 1,332. The Nasdaq (COMP) rose 33 points, or 1.2%, to 2,871.

U.S. investors came off a holiday weekend with a renewed focus onEurope's debt crisis, which has been dominant in recent months.

"We're still in a pattern where Europe is driving the bus," said Art Hogan, a managing director at Lazard Capital Markets. "Fortunately, for the moment there is no disaster du jour to take out our legs, so stocks are rallying."

Investors were encouraged by signs over the weekend that pro-bailout parties in Greece were gaining in the polls. In addition, four major Greek banks received recapitalization funds under the nation's bailout program. The extra capital helped ease concerns that a so-called bank jog in Greece could develop into a full-blown run.

Spain is also prominent in investors' minds amid fresh worries about the health of its banking system, after the Spanish government agreed last week to inject €19 billion into one of the nation's largest lenders.

The yield on 10-year Spanish government bonds eased slightly Tuesday, one day after the spread between Spanish and German debt reached the highest level since the creation of the euro.

Investors have also been fearful that the slowing of China's economy could cause a so-called "hard landing" for the world's No. 2 economy. But there is speculation Beijing will announce more stimulus spending in China, including a program to spur auto purchases.

The Chinese government has disputed the talk of impending stimulus, said Dan Greenhaus, chief equity strategist at BTIG. "But it's clear China is inching closer to some level of fiscal support," he added.

But the focus could shift back to the U.S. economy from overseas worries, given the importance of upcoming economic reports.

Due later this week are the May jobs report, key readings on manufacturing and auto sales. Economists surveyed by CNNMoney forecast that employers added 150,000 jobs in May, and that unemployment remained at 8.1%.

The dollar was slightly lower against the euro and British pound, but gained versus the Japanese yen.

Oil for July delivery fell 10 cents to settle at $90.76 a barrel.