U.S. stocks rose on Tuesday as data reassured investors about the state of the housing market, considered one of the biggest drags on a recovery, while a weak dollar boosted commodity prices.

Sentiment also improved as concerns receded about the impact of Dubai's debt woes, which some had feared could lead to another global crisis.

The U.S. dollar index <.DXY> fell 0.8 percent against a basket of currencies as waning anxiety about Dubai limited the greenback's safe-haven appeal.

Investors have calmed down and realized that Dubai won't become a global systemic risk, said John Brady, senior vice president at MF Global in Chicago. Because of that, along with the dollar, risk assets are benefiting.

Crude oil futures gained 1.6 percent while the S&P energy index <.GSPE> advanced 1.7 percent. The materials index <.GSPM> also rose 1.7 percent.

Pending sales of previously owned U.S. homes rose more than expected in October, reassuring investors about the state of the troubled sector.

Sales advanced to their highest level in 3-1/2 years, according to data from the National Association of Realtors, sending the Dow Jones home construction index <.DJUSHB> up 1.3 percent.

The Dow Jones industrial average <.DJI> rose 127.64 points, or 1.23 percent, to 10,472.48. The Standard & Poor's 500 Index <.SPX> gained 12.97 points, or 1.18 percent, to 1,108.60. The Nasdaq Composite Index <.IXIC> climbed 29.69 points, or 1.38 percent, to 2,174.29.

Construction spending was flat in October, above the expectation for it to slide in the month. In addition, the Institute for Supply Management said that the manufacturing sector expanded in November, though the expansion was less than expected.

Staples Inc jumped 6.2 percent to $24.77 after it reported adjusted third-quarter earnings that beat expectations and forecast sales growth in its fourth quarter.

Shares of troubled insurer American International Group Inc surged 9.3 percent to $31.06 after it closed a pact with the New York Federal Reserve Bank that slashes its debt under a credit facility by more than half.

The benchmark S&P 500 is up 63.9 percent from its 12-year closing low on March 9.

(Editing by Jan Paschal)