Stocks extended gains on Tuesday, with the Nasdaq rising 3 percent as investors latched onto signs of easing stress in Europe's bond markets as well as positive economic data at home and abroad.

Housing starts and permits for future construction surged to a 1-1/2 year high in November as demand for rental apartments rose. The news reinforced the view that that U.S. economy will continue to see moderate growth.

The Dow Jones industrial average <.DJI> was up 312.35 points, or 2.65 percent, at 12,078.61. The Standard & Poor's 500 Index <.SPX> was up 33.27 points, or 2.76 percent, at 1,238.62. The Nasdaq Composite Index <.IXIC> was up 76.47 points, or 3.03 percent, at 2,599.61.

(Reporting by Ryan Vlastelica; Editing by Kenneth Barry)

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