US STOCKS-Wall St flat as Washington fiscal battles weigh

* Many on Wall Street see volatility from budget squabbles

* Applied Materials (NasdaqGS: AMAT - news) shares rise on merger with Tokyo Electron

* Facebook (NasdaqGS: FB - news) leads Nasdaq on report it could be allowed in China

* Dow, S&P up 0.1 pct; Nasdaq up 0.3 pct

By Rodrigo Campos

NEW YORK, Sept 24 (Reuters) - U.S. stocks were little changed in choppy trading on Tuesday after data failed to ease investor concerns about the impact on the economy of stalled budget negotiations in Washington.

The S&P 500 faced a possible fourth straight day of decline, but a gain of nearly 5 percent in Facebook shares led the Nasdaq composite index higher.

Tea Party-backed U.S. senators threatening to stall a bill to fund the U.S. government ran into a wall of resistance late Monday from top Senate Republicans, including Minority Leader Mitch McConnell.

The move, however, did not eliminate the possibility of a shutdown, and signs still pointed to a frantic last-minute showdown that will determine whether the U.S. government stays open next week. Republicans want to cancel funding for "Obamacare," President Barack Obama's healthcare law.

While many on Wall Street expected an eventual government shutdown to be short and not affect markets deeply, volatility was expected.

"Investors have a legitimate cause for near term concern," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

U.S. consumer confidence fell in September, dragged down by consumers' outlook. U.S. single-family home prices rose in July at a slightly slower pace than forecast, though the gain from a year ago was the strongest in more than seven years, separate reports showed.

The data also failed to remove investor uncertainty about the Fed's intentions about a pullback from its stimulus efforts. The Fed cited the budget and debt ceiling negotiations in Washington as a reason to keep its current stimulus intact.

"The stoppage on the fiscal side is going to keep the monetary flood gates open," said Ablin about the Fed's quantitative easing. "Investors are looking past the taper."

The Dow Jones industrial average rose 17.4 points or 0.11 percent, to 15,418.78, the S&P 500 gained 1.48 points or 0.09 percent, to 1,703.32 and the Nasdaq Composite added 12.475 points or 0.33 percent, to 3,777.762.

Facebook shares jumped 4.9 percent to $49.50 after the South China Morning Post reported the online social media giant and other websites deemed sensitive and blocked by the Chinese government will be accessible in a planned free-trade zone in Shanghai.

Lennar (NYSE: LEN - news) shares led discretionary stocks higher with a 3.7 percent rise to $35.77 after the No. 3 U.S. homebuilder reported a better-than-expected quarterly profit.

Shares of Applied Materials rose 6.9 percent to $17.09 after the chipmaker and Tokyo Electron Ltd said they will merge in an all-stock deal, creating a $29 billion company.

Red Hat (NYSE: RHT - news) , the world's largest commercial distributor of the Linux operating system, reported late on Monday a slower growth in billings than analysts had expected and its shares fell 11.7 percent to $46.76.