* Banks rise on positive developments in Europe * Home prices drop in January, Midwest business shrinks * Dow up 1.4 pct, S&P up 1.3 pct, Nasdaq up 1.8 pct * For up-to-the-minute market news click STXNEWS/US (Updates to midmorning) By Leah Schnurr NEW YORK, March 31 (Reuters) - U.S. stocks rose on Tuesday despite gloomy economic data, with March on track for its best month in six years, as developments in Europe helped banks and investors scooped up shares of big-cap technology companies. The latest round of data showed single-family home prices plunged in January, business activity in the Midwest contracted in March more severely than expected and consumer confidence rose slightly in March but was still mired near record lows. Technology shares also supported the market as Google (GOOG.O: Quote, Profile, Research, Stock Buzz) gained 2.1 percent to $350 after the company and Walt Disney (DIS.N: Quote, Profile, Research, Stock Buzz) said they have reached a pact to offer ad-supported channels on YouTube. Shares of Disney added 1.5 percent to $18.12. For details see ID:nN30366003. Sentiment in the banking sector was boosted after Barclays (BARC.L: Quote, Profile, Research, Stock Buzz) declined to take part in a British government asset protection scheme and Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) outlined its future as a viable insurance group following a hefty loss in 2008. "I think it was the tone overseas and Barclays in particular that gave people a good place to start today," said John Forelli, portfolio manager at Independence Investments LLC in Boston. "The more people don't have to worry about ... counterparty risk the easier funds will flow in transactions." The Dow Jones industrial average .DJI rose 106.89 points, or 1.42 percent, to 7,628.91. The Standard & Poor's 500 Index .SPX gained 10.49 points, or 1.33 percent, to 798.02. The Nasdaq Composite Index .IXIC climbed up 27.13 points, or 1.81 percent, to 1,528.93. The broad S&P 500 was on track to end March as the best month since April 2003 after a rapid rally that has seen stocks climb more than 17 percent off 12-year lows hit on March 9. Barclays is also in exclusive talks to sell its iShares asset management unit to CVC Partners for about 3 billion pounds ($4.3 billion), according to a person familiar with the situation. ID:nLV453545 The S&P financial index .GSPF rose 4.4 percent, bouncing back from a sell-off on Monday when it was hurt by anxiety over the health of the banking sector. Major U.S. banks gained, including JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz), up 5.2 percent at $26.14, while Bank of America shares (BAC.N: Quote, Profile, Research, Stock Buzz)jumped 9.5 percent to $6.60. On the economic front, prices of U.S. single-family homes in January dropped a record 19 percent from a year earlier, indicating the housing market is still in the grips of a deep recession, while the Institute for Supply Management-Chicago index fell. ID:nNYS004965 ID:nN30344707 U.S. consumer confidence in March came in barely above the record low as the economy struggled and job prospects grew increasingly uncertain. ID:nN31406485

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