US STOCKS-Wall St gains in light volume on weaker dollar

* S&P 500 on track for fourth week of losses

* Dollar falls broadly after weak economic data

* Materials, banks lead market higher

* Dow up 0.2 pct, S&P up 0.3 pct, Nasdaq up 0.4 pct * For up-to-the-minute market news see [STXNEWS/US] (Updates to afternoon, changes byline)

By Rodrigo Campos

NEW YORK, May 27 (Reuters) - U.S. stocks rose in light volume on Friday, with basic materials shares leading the way as commodity prices kept rising on the back of a weaker U.S. dollar.

The greenback fell broadly after weaker-than-expected U.S. consumer spending and housing data stoked worries that the recovery is losing momentum.

Freeport-McMoRan Copper & Gold Inc rose 2.5 percent to $51.65. The S&P materials sector index <.GSPM> added 0.8 percent as the dollar's decline helped lift metals and other commodity prices. The Reuters-Jefferies CRB index <.CRB> was headed for a third straight week of gains.

The inverse correlation of the dollar to equities "seems to be a trend that you can focus on as an investor for the time being," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

"The logic is that a weaker dollar helps increase exports, sales and profits for multinational companies in the United States."

The Dow Jones industrial average <.DJI> gained 28.64 points, or 0.23 percent, to 12,431.30. The Standard & Poor's 500 Index <.SPX> rose 4.11 points, or 0.31 percent, to 1,329.80. The Nasdaq Composite Index <.IXIC> added 10.24 points, or 0.37 percent, to 2,793.16.

The S&P 500 was on track to close its fourth straight week of losses, a streak not seen since February 2010.

Thin trading made for a lackluster day on Wall Street, with desks short-staffed before the Memorial Day holiday that will keep U.S. markets closed on Monday.

"Trading is on the soft side, with many investors getting a head start on the holiday weekend," RDM Financial's Sheldon said.

Bank stocks led gains in Europe and also boosted the U.S. market. Bank of America , which had the heaviest turnover on the New York Stock Exchange with more than 9 million shares, rose 2.1 percent to $11.70. It was the Dow's biggest percentage gainer.

Medco Health Solutions Inc will lose a major pharmacy benefit contract to CVS Caremark Corp starting next year, a setback that drove its shares down 9.8 percent to $58.13. CVS shares rose 1.8 percent to $38.83. [ID:nN27298204]

On the macroeconomic front, separate reports showed the U.S. economy remained sluggish early in the second quarter with high gasoline prices crimping consumer spending and bad weather helping to push home resales to a seven-month low in April. [ID:nN271881]. (Reporting by Rodrigo Campos; Editing by Jan Paschal)