NEW YORK (CNNMoney) -- U.S. stocks started higher Tuesday, but gains were slim as investors digested mixed news out of Europe.
Investors were heartened by better-than-expected economic growth in Germany but face more uncertainty in Greece. Politicians in Athens failed to agree on a coalition government, and President Karolos Papoulias' office said the debt-wracked country will hold new elections in response to the political stalemate.
The Dow Jones industrial average (INDU) rose 10 points, or 0.1%, the S&P 500 (SPX)gained 1 point, or 0.1%, and the Nasdaq (COMP) added 7 points, or 0.3%.
The political instability in Greece has re-ignited fears that the country could exit the euro and imperil Europe's periphery in the process.
Meanwhile, German economic growth came in at 0.5% in the first quarter. That's far better than the 0.2% decline in gross domestic product at the end of last year that had raised fears of Europe's largest economy possibly falling into recession.
German growth also helped other European countries avoid recession, lifting the reading for all of the European Union to 0.1%, and leaving GDP unchanged in the 17-nation eurozone.
There had been fears that both the EU and eurozone would report their second straight quarter of declining GDP, the common benchmark for an economy in recession. By that standard, 12 of the nations in the EU are now mired in an economic downturn.
Still, anxieties over Europe continue to loom large this week.
European finance ministers are winding up a two-day meeting Tuesday and newly elected French President François Hollande is set to meet with German Prime Minister Angela Merkel immediately after Tuesday's swearing-in ceremony.
Late Monday, Moody's downgraded 26 Italian banks between one to four notches, saying, "the potential for further rating transition is heightened by the possibility of rapid increases in problem loans."
Concerns about the stability of the financial system have resurfaced since JPMorgan Chase (JPM, Fortune 500) revealed a $2 billion trading loss last week. That loss is sure to be high on the agenda during the bank's shareholder meeting Tuesday.
U.S. stocks fell Monday amid worries about the stability of the eurozone and the safety of the U.S. banking sector.
Economy: Reports on retail sales and inflation for April were close to expectations, providing additional support for stocks.
Retail sales edged up 0.1% last month, below the forecast from a survey of economists by Briefing.com, after increasing by 0.7% in March.
The Consumer Price Index was flat in April, as expected, after rising by 0.3% in March.
Companies: Avon Products (AVP, Fortune 500) said that Coty has withdrawn its bid for the company, less than a week after it had upped its offer with backing from Warren Buffett's Berkshire Hathaway (BRKA, Fortune 500). Avon's board had said it wanted a week to consider the latest offer but Coty had demanded an immediate answer. Shares of Avon tumbled.
Dow component Home Depot (HD, Fortune 500), a bellwether of activity in the nation's troubled home building industry, reported quarterly earnings in line with estimates but issued an earnings forecasts that fell short. The stock dipped.
Shares of daily deals site Groupon (GRPN) surged for a second day. The company reported narrowing losses and better-than-expected sales Monday, giving investors hope that it can steady its ship.
In a sign of strong demand from investors for shares in its upcoming initial public offering, Facebook boosted the target price range for its stock. Facebook (FB) now expects to price its shares at $34 to $38 each, up from the $28 to $35 range it set earlier this month, according to its latest filing with the Securities and Exchange Commission early Tuesday.
World markets: European stocks were mostly higher in afternoon trading. Britain's FTSE 100 (UKX) was flat, France's CAC 40 (CAC40) was up 0.6% and the DAX (DAX) in Germany rose 0.3%.
Asian markets ended mixed, with the Shanghai Composite (SHCOMP) closing off 0.3%, the Hang Seng (HSI) in Hong Kong gaining 0.8%, but Japan's Nikkei (N225) falling 0.8%.
Currencies and commodities: The dollar was higher against the euro, the British pound and the Japanese yen.
Oil for June delivery slipped 22 cents to $94.56 a barrel.
Gold futures for June delivery dropped $4.10 to $1,558 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury edged lower, boosting the yield to 1.79%.
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