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DJI- NEW YORK, May 23 (Reuters) - U.S. stocks staged a late-day reversal on Wednesday, rallying into the close in another volatile session as a sharp rise in materials shares boosted the S&P 500 and gains in Apple helped lift the Nasdaq.

The action shortly before the market's close was a mirror image of Tuesday when stocks gave up gains in the last minutes of trading. The late rebound suggested investors saw value in the market after the S&P 500 fell just below 1,300 but also underscored the skittishness of the trading environment.

One trader warned not to read too much into the move that lifted the indexes near breakeven for the day.

"I don't make anything of this. Volumes are very low, so there's no conviction," said Todd Schoenberger, managing principal at the BlackBay Group in New York. "We're only hearing what we want to hear. Don't be surprised if futures are disappointed tomorrow."

Towards the close traders cited rumors that the European Union was considering a proposal to guarantee bank deposits across the bloc. Such a move could assuage fears of bank runs in Spain and Greece. The rumors, which one trader said may have originated in London, appeared to be unfounded and served to highlight the markets' current sensitivity to events in Europe.

In the overall market, the Dow Jones industrial average <.DJI> dipped 6.66 points, or 0.05 percent, to 12,496.15. The S&P 500 Index <.SPX> edged up 2.23 points, or 0.17 percent, to 1,318.86. The Nasdaq Composite <.IXIC> gained 11.04 points, or 0.39 percent, to 2,850.12.

For most of the day shares fell by more than 1 percent as EU officials said euro zone countries must prepare contingency plans for a possible Greek exit of the currency bloc, while a weak outlook from Dell Inc cast doubts about the strength of global tech spending.

The agreement by euro-zone officials on contingency planning for a Greek exit of the euro zone, or "Grexit" as some investors are now calling it, came during a teleconference of the Eurogroup Working Group on Monday, sources told Reuters.[ID:nL5E8GN7NF]

Eric Kuby, chief investment officer at North Star Investment Management in Chicago, said renewed concerns about Greece, troubling outlooks from Dell and others, worries about the economy, Facebook's disappointing IPO and JPMorgan's recent trading loss were adding up to significant headwinds.

"It has made people less likely to jump in there and buy stocks," he said. "A lack of good news, some bad news and these worries that have been around for a long time make it hard to get a rally going."

The S&P 500 is down 7 percent from a peak in April but is up 4.9 percent for the year so far. Some analysts are expecting the index to test its 200-day moving average at around 1,280, another 2 percent below current levels.

Facebook Inc and banks, including Morgan Stanley , were sued by the social networking leader's shareholders, who claimed the defendants hid Facebook's weakened growth forecasts ahead of its $16 billion initial public offering. The stock was up 3.2 percent at $32 after falling more than 30 percent from it peak on Friday. [ID:nL1E8GN26I]

NYMEX- NEW YORK, May 23 (Reuters) - U.S. crude futures fell more than 2 percent and settled below $90 a barrel on Wednesday as talks between Iran and the West eased supply disruption fears and as concerns about slower economic growth fueled worries about curbed petroleum demand.

Iran and six major powers exchanged proposals at talks in Baghdad on Wednesday, attempting to defuse a dispute over Tehran's nuclear energy program. [ID:nL5E8GN43L]

Wednesday's meeting came a day after International Atomic Energy Agency (IAEA) Director General Yukiya Amano said he expected to sign a deal with Iran soon to boost cooperation with the investigation into the Islamic Republic's nuclear activity, although differences remained. [D:nL5E8GM7JN]

Also pressuring oil prices was the Energy Information Administration's weekly report showing rising U.S. crude inventories and lackluster fuel demand.

U.S. crude stocks rose 883,000 barrels last week, only slightly less than expected, the EIA said. [EIA/S]

* On the New York Mercantile Exchange, July crude fell $1.95, or 2.12 percent, to settle at $89.90 a barrel, having traded from $89.28 to $91.72.

* The World Bank cut its economic growth forecast for China this year to 8.2 percent and urged the country to rely on easier fiscal policy that boosts consumption rather than state investment to lift activity. [ID:nL4E8GM24J]

* European leaders, meeting on Wednesday and at odds over how to resolve the deepening crisis in the euro zone, have been advised by senior officials to prepare contingency plans in case Greece quits the single currency area. [ID:nL5E8GN3TF]

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade fell to a near two-month low, pressured by a broad sell-off in commodities tied to worries about the euro zone, as well as improving U.S. crop weather, traders said.

* World stocks skidded and the dollar firmed on worries about Greece's possible exit from the euro zone, which would deepen the region's debt crisis and hurt an already fragile global economic recovery. [MKTS/GLOB]

* Additional pressure stemmed from fears that China, the world's biggest soy buyer, might be either canceling purchases of U.S. soybeans or rolling old-crop sales forward to the next crop year due to sagging domestic crush margins.

* Improving U.S. crop weather added pressure. Traders said updated midday forecasts for next week and beyond failed to confirm any additional heat in the U.S. Midwest crop belt.

* After a hot spell this weekend, cooler temperatures are expected next week and rains will shift back to the northwest half of the Midwest early in the 11- to 15-day period, the Commodity Weather Group said.

* Spot soybeans fell to the lowest level since March 29 on continuous charts, while the July soybean contract fell to its lowest level since March 22.

* Soyoil lost ground to soymeal on meal/oil spreads, dragged down by declines in U.S. crude oil. Spot soyoil hit a five-month and dropped nearly 3 percent, its biggest one-dayplunge since September 2011.

* As of 1:19 p.m. CDT (1819 GMT), ICE U.S. July soybeans were down 19 cents at $13.63-1/4 per bushel on volume of 823 contracts.

FCPO- SINGAPORE, May 23 (Reuters) - Malaysian palm oil futures slipped to their lowest in more than five months on Wednesday, tracking a downward trend in broader commodities markets as investor caution over the euro zone debt crisis resurfaced.

Germany has dismissed a French-led call for euro zone governments to issue common bonds, raising fears of a potential Greek exit from the single currency ahead of a meeting of European leaders. [ID:nL5E8GM4K6]

Palm oil futures were not spared from the broad-based commodities sell-off, losing almost 3 percent to close and just above the psychologically key level of 3,000 ringgit.

"The palm oil market was under pressure today from the beginning. External oilseed markets were down so palm oil fell in line with market sentiment," said a trader with a foreign commodities brokerage in Malaysia.

Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange lost 2.9 percent to close at 3,019 ringgit ($961) per tonne after touching a low of 2,993 ringgit, a level not seen since Dec. 19.

Traded volumes stood at 55,312 lots of 25 tonnes each, more than double the usual 25,000 as traders rushed in to liquidate their positions.

Reuters market analyst Wang Tao expressed a bearish view, saying palm oil would drop further to 2,971 ringgit, the Dec. 15 low, as it has dropped below 3,019 ringgit. [ID:nL4E8GN1AO]

Despite healthy demand, concerns about the global economy were playing a bigger role in driving the market, traders said.

"If you are talking about demand, it is definitely there. But with this kind of scenario, it's not like those days when the buyer will chase the seller," one trader said.

REGIONAL EQUITY- May 23 (Reuters) - Southeast Asian stocks fell on Wednesday, tracking losses across regional markets, as investors fretted over the impact of the possibility of a Greek exit from the euro zone.

Singapore's Straits Times index <.FTSTI> fell 1.5 percent and closed at the day's lows bringing its losses for the month to 6.5 percent. Indonesia <.JKSE> lost 0.98 percent while Thailand <.SETI> fell 1.84 percent as Tuesday's bounce from oversold levels proved temporary.

Shares in PTT Exploration and Production fell more than 5.9 percent to a seven-month low on concern about a possible capital increase after the oil and gas explorer offered $1.9 billion for Mozambique-focused explorer Cove Energy .[ID:nL5E8GN21B]

Along with energy stocks, financials across the region were weak putting pressure on markets as the two sectors generally carry the heaviest weights on regional benchmarks.

In Singapore, UOB Ltd and OCBC fell 2.6 percent and 2.2 percent respectively and were the top two drags on Singapore's Straits Times index.

Analysts at BNP Paribas estimate that bank shares in the ASEAN region could fall by about 16 percent, on average, in the event of a mild global recession.

While that remains the brokerage's most likely scenario, BNP warned that if a global financial meltdown were to occur bank stocks could see as much as a 50 percent drop that could take valuations to those seen in the global financial crisis in 2008.