* Auto industry optimism sends GM, Ford shares up * GE jumps after backing dividend payout plan * Indexes rise more than 2 pct after Monday's sell-off * For up-to-the-minute market news, please click on [STXNEWS/US] (Updates to midmorning) By Ellis Mnyandu NEW YORK, Dec 2 (Reuters) - U.S. stocks rose on Tuesday as investors snapped up beaten-down shares after Monday's steep sell-off and news that General Electric (GE.N: Quote, Profile, Research, Stock Buzz) would maintain its dividend helped buoy sentiment. GE shares climbed more than 9 percent, making the stock one of the standout Dow constituents. A rebound in energy shares, including Chevron (CVX.N: Quote, Profile, Research, Stock Buzz), up nearly 4 percent, also underpinned the market, along with buying into defensive stocks, including shares of pharmaceutical company Merck (MRK.N: Quote, Profile, Research, Stock Buzz), up more than 5 percent. Optimism about a government rescue for the U.S. auto industry added to the positive tone, with General Motors (GM.N: Quote, Profile, Research, Stock Buzz) up 6 percent and Ford (F.N: Quote, Profile, Research, Stock Buzz) rising 10 percent. Monday's slide broke the S&P 500's 5-day streak of gains and put the market just a whisker away from retesting 11-year lows. "People are looking at GE and saying, hey, well the dividend yield is pretty good and they are sticking with their earnings estimates, although it's at the lower end," said Cummins Catherwood, managing director at Boenning & Scattergood in West Conshohocken, Pennsylvania. The Dow Jones industrial average .DJI rose 178.01 points, or 2.18 percent, to 8,327.10. The Standard & Poor's 500 Index .SPX gained 21.40 points, or 2.62 percent, to 837.61. The Nasdaq Composite Index .IXIC shot up 30.06 points, or 2.15 percent, to 1,428.13. GE shares climbed to $16.95 on the New York Stock Exchange after the company reiterated its plan to maintain a dividend payout in 2009 even as it works to restructure its embattled finance arm, GE Capital. For details, see [ID:nN01506020]. Shares of Chevron rose to $74.72 as U.S. crude oil CLc1 rose 79 cents to $50.04 a barrel. Shares of drugmaker Merck & Co Inc (MRK.N: Quote, Profile, Research, Stock Buzz), among companies considered better positioned to withstand a faltering economy, rose to $26.30. GM shares climbed to $4.85, while Ford rose to $2.80. Executives of the big-three U.S. automakers, including Chrysler, are due to present Washington officials with their plans to justify a $25 billion bailout as worries about possible bankruptcy persist. As part of its plan, Ford said it expected its overall and North American automotive business to break even or be profitable in 2011. Ford said it did not anticipate a liquidity crisis next year, barring a bankruptcy of one of its domestic rivals. [ID:nWNA0721] Even so, worries about the deepening economic slump fueled caution as did a brokerage downgrade of diversified manufacturer 3M Co (MMM.N: Quote, Profile, Research, Stock Buzz), which fell 1.2 percent at $61.58. The lobbying for the auto sector bailout will coincide with the release of November U.S. auto sales reports, which will likely be bleak. (Editing by Kenneth Barry)

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