* Dow Chemical, DuPont jump on reported merger talks
* S&P materials on track for biggest one-day gain in 4 years
* Energy stocks higher as oil prices recover
* Indexes up: Dow 1 pct, S&P 0.69 pct, Nasdaq 0.08 pct (Adds details, changes comment, updates shares)
By Tanya Agrawal
Dec 9 (Reuters) - U.S. stocks looked set to snap a two-day losing streak as crude oil prices clawed back some losses and reported merger talks between Dow Chemical and DuPont helped prop up shares of raw materials companies.
Crude oil prices steadied after a brutal five-day selloff, but many investors expect oil to fall below 2008 lows due to a global supply glut. Copper prices also held their ground.
Dow Chemical was up 11.2 percent at $56.59 while DuPont jumped 12.5 percent to $74.94, after reports that the companies are in talks to merge.
DuPont was the biggest boost to the Dow Jones Industrial average and the second biggest boost on the S&P 500. The stock added 58 points to Dow's 188-point rise.
"I think at present equities are largely events driven, last week's performance was driven by employment, this week it is oil, next week it is the Fed," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
"Uncertainties are relatively higher at the moment and accordingly prices will trend sideways into the year-end."
Investors remain cautious as concerns regarding China's slowing economy and its impact on global demand persist. Those concerns have also hurt commodity stocks this year as China is the world's biggest consumer of metals.
At 10:48 a.m. ET (1548 GMT) the Dow Jones industrial average was up 176.51 points, or 1 percent, at 17,744.51, the S&P 500 was up 14.22 points, or 0.69 percent, at 2,077.81 and the Nasdaq Composite was up 4.18 points, or 0.08 percent, at 5,102.43.
All 10 major S&P 500 sectors were higher with the materials index's 4.3 percent rise leading the advancers. The index was on track to post its biggest one-day gain in four years.
The energy index was the second biggest gainer with a 3.2 percent rise. The index has lost more than 10 percent since the beginning of the month. Oil majors Exxon was up 2.6 percent and Chevron was up 3.6 percent.
The rout in crude oil prices is not expected to derail a widely expected rate hike by the U.S. Federal Reserve, when it meets on Dec. 15-16. The central bank has not raised rates since June 2006.
"At the moment perhaps the biggest risk is not raising rates which would be a no confidence vote in the U.S. economy, fuelling investor angst and reducing near-term appetite for equities," Sandven said.
Yahoo was down 0.5 percent at $34.67, after the company's board decided not to sell its Alibaba stake. Alibaba was up 0.32 percent at $84.65
Costco Wholesale was down 4.2 percent at $161.8 after it reported a fall in same-store sales for the third straight quarter. The stock was the second biggest drag on the S&P and the Nasdaq.
Advancing issues outnumbered decliners on the NYSE by 2,250 to 647. On the Nasdaq, 1,554 issues rose and 999 fell.
The S&P 500 index showed 8 new 52-week highs and 8 new lows, while the Nasdaq recorded 22 new highs and 68 new lows. (Reporting by Tanya Agrawal and Aastha Agnihotri; Editing by Anil D'Silva)