European stocks edged higher on Tuesday, halting a sharp three-session sell-off, although traders and investors said any rally was likely to be short-lived due to persistent worries over Europe's debt crisis. .EU

At a summit later this week, European leaders are set to discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund. But German Chancellor Angela Merkel has dashed hopes that Berlin would allow joint bonds issued by the euro zone.

Struggling debtor Spain is likely to pay its highest short-term borrowing rates in over six months at auction on Tuesday as investors demand high premiums, skeptical about euro zone leaders' readiness to act decisively at the June 28-29 summit to tackle the bloc's problems.

Rupert Murdoch's News Corp (NWSA.O) may split into two companies, the Wall Street Journal reported, citing people familiar with the situation.

Striking workers from the Fort Worth, Texas, plant where Lockheed Martin Corp (LMT.N) builds F-16 and F-35 fighter planes will vote on Thursday on whether to accept a new contract agreed by a key union and management late Saturday, the union said.

Facebook Inc (FB.O) named Chief Operating Officer Sheryl Sandberg a director on Monday, elevating the first woman to a board that comprises seven men.

A U.S. federal jury found on Monday that French entertainment group Vivendi (VIV.PA) must pay $954.6 million in damages to Liberty Media Corp (LMCA.O) in a 2003 breach of contract lawsuit.

Brent crude held steady near $91 per barrel on Tuesday as short-covering and forecasts of a drop in U.S. oil inventories offset worries that this week's European summit will be unable to produce a clear action plan to tackle the region's debt crisis.

On the macro front, investors awaited the S&P Case/Shiller Home Price Index for April, due at 1300 GMT, as well as the June consumer confidence, due at 1400 GMT, while on the earnings front, H&R Block (HRB.N) is set to report quarterly results.

Stocks fell sharply on Monday, putting the S&P 500 near break-even for June so far, as investors saw little reason to be optimistic about a European Union summit this week.

The Dow Jones industrial average .DJI dropped 137.97 points, or 1.09 percent, to 12,502.81. The Standard & Poor's 500 Index .SPX lost 21.30 points, or 1.60 percent, to 1,313.72. The Nasdaq Composite Index .IXIC declined 56.26 points, or 1.95 percent, to 2,836.16.

(Reporting by Blaise Robinson; Editing by John Stonestreet)

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