US STOCKS-Dow, S&P 500 rise as Ukraine tensions ebb; US data helps

* West holds off on more severe sanctions against Russia

* Facebook (NasdaqGS: FB - news) buys Oculus for $2 billion; shares fall

* King Digital falls in trading debut

* Clinical lab shares rise after GOP files Medicare bill

* Dow up 0.2 pct; S&P 500 up 0.2 pct; Nasdaq off 0.2 pct (Updates to midday)

By Ryan Vlastelica

NEW YORK (Frankfurt: HX6.F - news) , March 26 (Reuters) - U.S. stocks mostly edged higher on Wednesday as geopolitical tensions over Ukraine appeared to ease and the latest U.S. economic data pointed to improving conditions, though investors found few reasons to push shares up substantially.

Russia and the West drew a tentative line under the Ukraine crisis after U.S. President Barack Obama and his allies agreed to hold off on more damaging economic sanctions unless Moscow goes beyond the seizure of Crimea, as Russian President Vladimir Putin said last week that he didn't want to do.

The development seemed to limit the odds that the biggest East-West conflict since the Cold War could escalate further, removing a potential headwind from markets. While few U.S. companies have direct exposure to the region, investors had been worried about any fallout from prolonged tensions.

"I would be shocked if there was any kind of escalation now, which eliminates some of the concerns people had and forces the market to focus back on the economy, where recent data has been lending credence to the theory that some recent issues were related to weather, not fundamentals," said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors in Indiana, Pennsylvania.

Orders for durable goods rose more than expected in February, ending two straight months of declines. Another report showed private-sector economic activity accelerated in March at a faster clip than in February as the services sector picked up, according to financial data firm Markit's preliminary composite Purchasing Managers Index.

The Dow Jones industrial average was up 33.78 points, or 0.21 percent, at 16,401.66. The Standard & Poor's 500 Index was up 4.26 points, or 0.23 percent, at 1,869.88. The Nasdaq Composite Index was down 7.12 points, or 0.17 percent, at 4,227.15.

The stock of King Digital Entertainment Plc, maker of the wildly popular "Candy Crush Saga" game, fell 10.4 percent to $20.16 in its trading debut on Wednesday, after the company's initial public offering valued it at about $6 billion. King was the most actively traded on the New York Stock Exchange.

Facebook Inc said late Tuesday it would buy Oculus VR Inc, a maker of virtual-reality glasses for gaming, for $2 billion. The acquisition follows Facebook's $19 billion deal to buy WhatsApp in February. Shares of the social networking company fell 3.3 percent to $62.77.

Healthcare stocks ranked among the strongest of the day, with the S&P healthcare sector index up 1 percent. Tenet Healthcare (NYSE: THC - news) shares gained 6.8 percent to $41.55.

Many names in the group rose a day after Republicans filed a new bill in the U.S. House of Representatives to avert a pay cut for doctors who participate in the Medicare health program for the elderly and disabled.

"Assuming that this bill gets passed, this should provide a relief point from what has been a significant overhang on [clinical lab] shares," analysts at International Strategy & Investment Group wrote in a note to clients.

Quest Diagnostics Inc (NYSE: DGX - news) was one of the S&P 500's biggest percentage gainers, up 5.6 percent at $58.01, followed by Laboratory Corp (Frankfurt: LAB.F - news) . of America Holdings, up 5.4 percent at $99.80.

Insmed Inc shares slid 12.8 percent to $15.96 after the company said its only experimental drug failed to meet the main goal of a mid-stage trial on patients with a form of bacterial lung infection.

In the corporate arena, Toyota Motor Corp said it will buy back up to 1.89 percent of its shares worth up to $3.5 billion in the automaker's biggest buyback in more than a decade. Toyota's U.S.-listed shares rose 2.9 percent to $111.57.

Clothing company PVH Corp (NYSE: PVH - news) , which owns such brands as Tommy Hilfiger and Calvin Klein, late Tuesday issued an adjusted full-year profit forecast that beat expectations. Shares rose 5.2 percent to $123.33. (Editing by Bernadette Baum and Jan Paschal)