US STOCKS-Wall St advances on Greek deal hopes, oil climb
* Staples, Office Depot in advanced merger talks - WSJ
* Stratasys drops after cutting outlook
* Factory orders fall for fifth straight month
* Indexes up: Dow 0.83 pct, S&P 0.5 pct, Nasdaq 0.07 pct (Updates to midday)
By Chuck Mikolajczak
NEW YORK, Feb 3 (Reuters) - U.S. stocks gained on Tuesday, as the benchmark S&P 500 index extended a late rally from the prior session, fueled by hopes of a deal on Greek debt and by rising oil prices.
Stocks had rallied late Monday on signs Greece was softening its approach to debt negotiations. A source told Reuters that Greek Finance Minister Yanis Varoufakis, in London to reassure private investors he was not seeking a showdown with Brussels over a new debt agreement, said the new left-wing government would spare privately held bonds from losses.
However, the Greek proposal to swap government debt for bonds with interest payments linked to economic growth got a cool reception from euro zone officials on Tuesday.
Adding support to U.S. equities was a further gain in oil prices, with U.S. crude up 2.9 percent to $50.99 and Brent up 2.6 percent to $56.16. Shares of offshore contract driller Transocean gained 5 percent to $18.17. Continuación...