Stocks edge higher even after home prices drop

NEW YORK (AP) ? Stocks eked out slight gains early Tuesday as the last week of trading in 2011 got off to a quiet start.

That’s despite some negative news on the housing front. The Standard & Poor’s/Case-Shiller index of home prices dropped in October in 19 of the 20 cities it tracks. It was a second straight month of declines, the latest evidence of a bumpy housing recovery. Atlanta, Detroit and Minneapolis posted the biggest declines. Prices in Atlanta and Las Vegas fell to their lowest points since the housing crisis began.

The stock market was closed Monday in observance of Christmas. Stocks are expected to trade within a narrow range this week as trading remains light.

The Dow Jones industrial average was up 17 points, or 0.2 percent, at 12,311 at 9:50 am EST. The S&P 500 was up 2, or 0.2 percent, at 1,267. The Nasdaq composite index gained 5, or 0.3 percent, to 2,623.

Last week, the Dow Jones index closed at a five-month high after a run of strong economic data in the U.S. However analysts expect the market to continue to be pressured by worries over the European debt crisis.

Italy’s borrowing costs rose Tuesday, reflecting investor anxiety. The yield on the country’s ten-year bonds hit 7 percent again, a level that is considered unsustainable in the long run. Greece, Ireland and Portugal had to seek relief from their lenders after their own borrowing costs rose to that level.

Italy is the euro zone’s third-largest economy and is considered too big to bail out. Mario Monti, the country’s new premier, got parliamentary approval last week for a big austerity package that is intended to save the country from financial disaster.

Markets have grown increasingly fearful over the past few months that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 trillion.