GLOBAL MARKETS-Wall Street rises, euro down ahead of ECB meeting

* S&P 500 held back by energy stocks

* Euro slips 0.5 percent after 1.5 percent jump on Monday

* Oil falls for first time in five sessions

* Italian banks soar, more than erasing post-referendum losses (Updates to late afternoon trading, adds commentary)

By Sinead Carew

NEW YORK, Dec (Shanghai: 600875.SS - news) 6 (Reuters) - Oil futures snapped a four-day rally on Tuesday on signs of higher output while the euro slipped from a three-week high ahead of a meeting of the European Central Bank on Thursday.

Wall Street was boosted by financial and telecom stocks while U.S. Treasury yields held in narrow ranges ahead of the ECB meeting. Italian banks rebounded.

The euro fell 0.5 percent to $1.071 as currency investors focused on the possibility the ECB may take a hawkish turn, even as it is widely expected to extend bond purchases.

The S&P 500 index turned solidly into positive territory in the afternoon helped by continued strength in financials and bullish bets on the two biggest U.S. telecom stocks. Also the S&P energy sector clawed back its morning losses despite continued weakness in oil.

Oil prices fell after data showed crude output rose in virtually every major export region and on news that Saudi Aramco had cut prices to big Asian customers.

The data followed last week's first OPEC output cut agreement since 2008 and sent Brent oil futures down $1.01, or 1.8 percent, to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.7 percent, to $50.93 per barrel.

"OPEC's probably taken the price up as much as it can. Now markets will look back to fundamentals - supply and weekly inventory reports" said John Augustine, chief investment officer at Huntington National Bank in Columbus (LSE: 0NPJ.L - news) , Ohio.

The Dow Jones industrial average was up 11.99 points, or 0.06 percent, to 19,228.23, the S&P 500 had gained 5.2 points, or 0.24 percent, to 2,209.91 and the Nasdaq Composite had added 18.35 points, or 0.35 percent, to 5,327.24.

The FTSEurofirst 300 index rose 1 percent, adding to previous gains. Data showed German industrial orders rose at their fastest pace in more than two years, stoking hopes that Europe's largest economy is set to accelerate.

Italy's referendum result was still in focus, with sources telling Reuters that state aid had been prepared for the world's oldest bank, Banca Monte dei Paschi di Siena (IOB: 0R7P.IL - news) .

Italy's FTSE MIB jumped 4.2 percent, more than erasing the previous day's losses, helped by a 9 percent rebound in Italian banking stocks as investors covered short positions ahead of the ECB meeting and some bet on a restructuring of the sector.

Longer-dated yields edged up partly after the report on Monte dei Paschi (Milan: BMPS.MI - news) di Siena.

"That helped reverse some of the risk-off sentiment at the longer-end of the yield curve," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.

The benchmark 10-year Treasury yield was 2.394 percent, up 0.7 basis point from Monday, while the 30-year bond yield was 3.080 percent, up 2.5 basis points. .

The U.S. dollar started to find some traction and was up 0.4 percent after dipping to a near three-week low against a basket of major currencies the previous day.

Gold was down 0.2 percent after hitting a 10-month low on Monday.

(Additional reporting by Karen Brettel and Richard Leong in New (KOSDAQ: 160550.KQ - news) York and Marc Jones, and Abhinav Ramnarayan in London; Editing by James Dalgleish and Lisa Shumaker)