US STOCKS-Futures edge up after sell-off; Spain eyed

Short-term Spanish yields rise after auction
* Case Shiller housing data, consumer confidence on tap
* Futures up: Dow 35 pts, S&P 1.2 pts, Nasdaq 10.5 pts
By Chuck Mikolajczak
NEW YORK, June 26 (Reuters) - U.S. stock index futures rose on Tuesday, indicating the S&P 500 may rebound from sharp losses in the prior session, but gains were muted after a Spanish bill auction met with falling demand.
Stocks fell on Monday to put the S&P 500 near break-even for June, as investors saw little reason to be optimistic about a European Union summit this week.
Spain's short-term borrowing costs nearly tripled at auction when the country sold 3.08 billion euros of its short-term debt, as the Treasury paid the highest rates to sell the paper since November.
Finance chiefs of the euro zone's four biggest economies will hold last-minute talks in Paris on Tuesday evening to discuss managing the crisis in the short term and proposals for closer long-term fiscal and banking integration in preparation for the summit later in the week.
According to a document prepared for the meeting, European leaders will discuss specific steps toward a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund.
"The market is going to pay attention and listen to any chatter that comes out over the next couple of days about what they think is going to come out of the summit," said Ken Polcari, managing director at ICAP Equities in New York.
"We are stuck in this predicament because the market is waiting for some real catalyst to push it one way or the other."
European shares were up slightly, with the FTSEurofirst 300 index adding 0.1 percent.
Cyprus became the latest euro zone member to ask for an aid package on Monday, adding to concerns about European leaders' ability to handle the crisis.
S&P 500 futures rose 1.2 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 35 points, and Nasdaq 100 futures added 10.5 points.
Economic data on tap includes S&P/Case Shiller Home Price indexes for April, at 9 a.m. (1300 GMT). Economists in a Reuters survey expect the seasonally adjusted 20-city index to rise 0.4 percent versus a 0.1 percent increase in the previous month.
At 10 a.m. (1400 GMT), the Conference Board releases its June consumer confidence report. Economists in a Reuters survey expect the main index to read 63.5 compared with 64.9 in May.
Rupert Murdoch's News Corp is thinking of splitting into two companies, the Wall Street Journal reported, citing people familiar with the situation.
Asian shares fell as investors remained skeptical that the EU summit would yield any substantive measures to solve the region's protracted debt crisis, now in its third year.