Wall Street rose on Friday, led by energy and materials stocks as commodity prices firmed in light trading before the long Memorial Day holiday weekend.

A sharp decline in the dollar helped lift oil, gold and other commodity prices.

The S&P Energy index <.GSPE> rose 0.8 percent. Occidental Petroleum added 1.8 percent to $106.87. Freeport-McMoRan Copper & Gold Inc rose 2.3 percent to $51.55.

Commodities, which rose as the dollar weakened, were heading for a third straight week of gains.

The dollar fell to a record low against the Swiss franc as investors remain concerned about fiscal pressures in the United States and euro zone. The euro also fell to a record low against the Swiss Franc.

I think we will be just moving sideways at the 1,330 level on the S&P as I don't see any factors that would make the market move in the near term, especially going in to the summer months, said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

The Dow Jones industrial average <.DJI> was up 70.61 points, or 0.57 percent, at 12,473.37. The Standard & Poor's 500 Index <.SPX> was up 7.19 points, or 0.54 percent, at 1,332.88. The Nasdaq Composite Index <.IXIC> was up 16.34 points, or 0.59 percent, at 2,799.26.

Banks gained in Europe and the United States. Bank of America , which had the heaviest turnover on the New York Stock Exchange, rose 2 percent to $11.70 and was the biggest percentage gainer on the Dow.

In Europe, shares were led higher by banks on a report Basel III capital requirements would not be as stringent as previously expected. However, strategists said shares were set to remain in a range until there was more clarity on the euro zone debt crisis.

On the macroeconomic front, U.S. consumer sentiment improved in May as job gains offset high gasoline prices, while inflation expectations diminished, according to the final reading by the Thomson Reuters/University of Michigan survey.

Pending home sales slumped 11.6 percent in April, hitting a seven-month low. Analysts were anticipating a drop of 1 percent.

I think people have pretty much given up on housing recovering in the near term, and since the sector contributes such a small amount to the overall economy now, a weak number here won't have a huge impact on stocks, said Maris Ogg, president of Tower Bridge Advisors in West Conshohocken, Pennsylvania.

Medco Health Solutions Inc will lose a major pharmacy benefit contract starting next year. The Blue Cross Blue Shield Association will move its mail order and specialty pharmacy benefit coverage to CVS Caremark under a three-year contract.

Medco shares fell 12.5 percent to $56.42 and were the biggest percentage decliners on the S&P 500 while CVS rose 2 percent to $38.91.

(Reporting by Angela Moon; Additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)