* U.S. services sector index slightly exceeds forecast
* Euro zone's major economies in decline-surveys
* Facebook shares fall to fresh low of $25.87
* Stocks up: Dow 0.2 pct, S&P 0.6 pct, Nasdaq 0.7 pct (Updates to close)
By Angela Moon
NEW YORK, June 5 (Reuters) - U.S. stocks rose on Tuesday, recovering some ground from last week's selloff, as data showing the vast U.S. services sector improved in May outweighed investor angst about the euro zone's fiscal crisis.
Financial stocks ranked among the best performers. The S&P 500 financial sector index gained 1.7 percent, significantly outperforming other sectors.
Bank of America shares shot up 2.9 percent to $7.10 and JPMorgan added 3.2 percent to $31.98. The financial sector index, however, has lost 13 percent since the start of May.
But the rebound was expected to be temporary as market sentiment remained bearish in the face of the euro zone's debt crisis and a slew of recent data that showed the world's largest economy was experiencing slower-than-expected growth.
The market could also be setting itself up for disappointment, with the European Central Bank meeting on Wednesday and Federal Reserve Chairman Ben Bernanke testifying on the economy before a congressional committee on Thursday.
"I wouldn't be shocked if we actually extended further gains from here, but those could easily be wiped out. The question is, do you really want to be picking up nickels and dimes in front of bulldozer?" said James Dailey, portfolio manager of TEAM Financial Asset Management.
"The market hasn't seen a real sellers' panic, which lies ahead."
The ECB meeting could have an impact on the euro crisis if the bank signaled a willingness to take action that would alleviate the financial stresses on Europe.
The Dow Jones industrial average was up 26.49 points, or 0.22 percent, at 12,127.95. The Standard & Poor's 500 Index was up 7.32 points, or 0.57 percent, at 1,285.50. The Nasdaq Composite Index was up 18.10 points, or 0.66 percent, at 2,778.11.
The pace of growth in the U.S. services sector picked up in May as a gauge of new orders improved, according to an industry report. The Institute for Supply Management's services index edged up to 53.7 in May from 53.5 in April, a touch above economists' forecast for it to hold steady.
The ISM data let investors breathe a brief sigh of relief after a number of negative economic reports. Those reports and concerns about the euro zone drove the S&P 500 down more than 6 percent in May.
On Friday the three major U.S. stock indexes slid more than 2 percent and the Dow industrials turned negative for the year after much weaker-than-expected non-farm payrolls in May.
Spain's Treasury Minister Cristobal Montoro said the nation's high borrowing costs have effectively shut the euro zone's fourth-largest economy out of the bond market and the European Union should help Madrid recapitalize its debt-laden banks.
Statements after emergency talks by the finance chiefs of the Group of Seven industrialized nations on the euro zone's deepening crisis gave investors little clarity.
Japan's finance minister said he told G7 members that Japan is confident in Europe's response to its problems, but indicated Tokyo was prepared to intervene in order to curb its currency.
Most major economies in the euro zone are now in various states of decline, according to business surveys that suggested even Germany is no longer immune to the crisis.
Facebook Inc shares fell 3.8 percent to $25.87, down 31 percent from the social networking giant's market debut on May 18.
About 6.05 billion shares changed hands on the New York Stock Exchange, the Nasdaq and Amex, slightly lower than the year-to-date daily average of 6.85 billion shares. (Reporting by Angela Moon; Editing by Kenneth Barry)