European stocks are up 0.2 percent in morning trade, lifted by expectation that this week's liquidity injection by the European Central Bank will alleviate tensions in the banking sector. .EU

Brent crude futures extended losses and slipped below $124 on Tuesday, halting a surge that threatened to hurt the global economy, though concerns over supply from the Middle East capped losses.

Federal Reserve Governor Elizabeth Duke, in testimony prepared for a congressional hearing on Tuesday, laid out the central bank's case for more action to bolster the U.S. housing market, saying it was a "significant drag" on economic recovery.

PostNL (PTNL.AS), the largest shareholder in Dutch express mail delivery company TNT Express (TNTE.AS), will not sell its shares in the "current circumstances", a spokesman said on Tuesday. United Parcel Service Inc (UPS.N) earlier this month offered 9 Euros a share, valuing TNT Express at 4.9 billion Euros ($6.56 billion).

General Motors (GM.N) is in advanced talks to buy a small stake in French automaker PSA Peugeot Citroen (PEUP.PA) as part of a proposed strategic alliance in Europe and elsewhere, sources familiar with the situation said on Monday.

McDonald's Corp (MCD.N), the world's biggest hamburger chain, said it planned to increase the number of franchised stores in China as it ramps up expansion in one of the world's fastest-growing consumer markets.

Online travel agency Priceline.com (PCLN.O) on Monday reported a stronger-than-expected fourth-quarter profit as the value of its bookings gained more than 50 percent from a year ago, sending its shares up more than 6 percent.

Bank of America Corp (BAC.N) won a victory when a U.S. appeals court ruled that a proposed $8.5 billion settlement with investors in mortgage-backed securities should be reviewed in New York state court, not federal court.

Yahoo (YHOO.O) has demanded licensing fees from Facebook (FB.N) for use of its technology, the companies said on Monday, potentially engulfing social media in the patent battles and lawsuits raging across much of the tech sector.

On the economic front, durable goods orders data is due at 1330 GMT, with economists in a Reuters survey expecting a 1 percent drop in orders after a 3 percent rise in December. The S&P Case/Shiller Home Price Index for December is due at 1400 GMT, and February's consumer confidence data will be released at 10 a.m. ET.

The benchmark S&P 500 closed at its highest level since mid-2008 on Monday, extending gains for a third session.

The Dow Jones industrial average .DJI inched down 1.44 points, or 0.01 percent, to 12,981.51. The Standard & Poor's 500 Index .SPX was up 1.85 points, or 0.14 percent, at 1,367.59, and the Nasdaq Composite Index .IXIC was up 2.41 points, or 0.08 percent, at 2,966.16.

(Reporting by Blaise Robinson; Editing by Will Waterman)

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