Hopes of more financial aid for debt-stricken Greece lifted Wall Street on Tuesday, but a sharp bounce at the open was largely eroded as more weak economic data brought investors back to earth.

Stocks jumped more than 1 percent at the open, but tracked lower through the day after disappointing economic reports on housing, consumer confidence and manufacturing echoed recent lackluster data that has drive the S&P 500 down around 2 percent in May -- its worst month since last August.

Rising expectations for a second aid package for Greece helped ease one of the uncertainties in the market, sending the dollar lower against the euro and providing a catalyst to raise the prices of dollar-denominated commodities, which feed through into the equity market.

Investors who bought this morning are now potentially either taking profits or taking a wait-and-see attitude, given the fact that we get the ISM manufacturing data tomorrow and the all-important jobs report coming out this Friday, said

Michael Sheldon, chief market strategist of RDM Financial in Westport, Connecticut.

U.S. crude futures rose 1.8 percent to $102.40 a barrel. Exxon Mobil Corp added 0.5 percent to $83, while Chevron Corp gained almost 1 percent to $104.12. The S&P energy index <.GSPE> added 0.5 percent.

The Dow Jones industrial average <.DJI> gained 71.60 points, or 0.58 percent, to 12,513.18. The Standard & Poor's 500 Index <.SPX> rose 7.40 points, or 0.56 percent, to 1,338.49. The Nasdaq Composite Index <.IXIC> added 20.62 points, or 0.74 percent, to 2,817.48.

The S&P 500 is testing the downtrend line from its May peak at around 1,335, according to analysts from Brown Brothers Harriman. A close above that level could indicate the sell-off is moderating.

Sheldon said a close below 1,334, would indicate that the downtrend is still firmly in place.

It looked like we were going to decisively break above that level, based on trading activity this morning. However, markets have given up more than half their gains, he said.

The U.S.-listed stock of Finnish mobile phone maker Nokia was the most heavily traded on the New York Stock Exchange, falling as much as 17 percent to a session low at $6.80, a fresh 52-week low, after the company abandoned hope of meeting key targets just weeks after setting them. By early afternoon, the stock had bounced off that low to trade at $7.06, but was still down nearly 14 percent.

European officials were mulling options for a second bailout package for Greece, with private-sector participation still under discussion. Germany, which was resisting extra funding, may drop its push for an early rescheduling of Greek bonds, the Wall Street Journal reported.

The end of the month was likely to encourage window dressing, when fund managers add to winners by buying those shares and sell losers to show their portfolios in a better light.

In the latest economic data, U.S. single-family home prices dropped in March, dipping below their 2009 low. The housing market remains bogged down by an inventory surplus and weak demand, according to the S&P/Case-Shiller composite index of 20 metropolitan areas.

The data sure doesn't say 'buy,' does it? said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. I see this stuff and I gotta stop myself from hitting the 'sell' button so much.

The Conference Board also said its index of consumer confidence fell in May on increased pessimism over the labor market and inflation worries.

Consumer discretionary shares were among the weakest. The S&P's sector index <.GSPD> was up a modest 0.3 percent.

The Institute for Supply Management-Chicago said business activity in the U.S. Midwest grew much less than expected in May. The data confirmed a weakening trend in manufacturing and comes ahead of the closely watched national ISM manufacturing survey on Wednesday.

(Editing by Jan Paschal)