(Adds after-hours drop in shares of Wells Fargo and Freddie Mac in paragraphs 10-12, volume in paragraphs 22-23)

NEW YORK, Nov 27 (Reuters) - U.S. stocks rose on Tuesday after Abu Dhabi's $7.5 billion purchase of a stake in Citigroup Inc C.N spurred a rebound in financial stocks and a drop in oil prices boosted shares of big manufacturers.

The $7.5 billion investment gives the No. 1 U.S. bank fresh capital as it wrestles with fallout from the subprime mortgage crisis and showed that investors were starting to see value among beaten-down bank stocks.

A more-than-$3 slide in oil prices also underpinned the market, helping shares of retailers and big manufacturers such as General Electric GE.N. The diversified manufacturer was the top contributor to the S&P 500's rise.

The market is buoyed by news of “the cash infusion into Citigroup,” said David Sowerby, market strategist for Loomis Sayles in Detroit.

Besides Citigroup's stock, other rising shares in the financial services sector included JPMorgan Chase & Co JPM.N and Bank of America Corp BAC.N. The S&P financial stocks index .GSPF rose 2.6 percent.

“Secondly, I believe that institutional investors are seeing more opportunities in the market to be more aggressive buyers, particularly when you look at extremely low yields in the Treasury market,” Sowerby added.

The Dow Jones industrial average .DJI was up 215.00 points, or 1.69 percent, at 12,958.44. The Standard & Poor's 500 Index .SPX was up 21.01 points, or 1.49 percent, at 1,428.23. The Nasdaq Composite Index .IXIC was up 39.81 points, or 1.57 percent, at 2,580.80.

CITIGROUP JUMPS

Abu Dhabi Investment Authority, considered the world’s largest sovereign wealth fund, is buying a 4.9 percent stake in Citigroup, whose stock finished up 1.5 percent at $30.26 on the New York Stock Exchange. For details, see [ID:nN27486222].

Shares of JPMorgan, the No. 3 U.S. bank, ended up 4.7 percent at $42.35 and shares of Bank of America, the No. 2 U.S. bank, climbed 2.5 percent to $42.94, both on the NYSE.

After the closing bell, shares of Wells Fargo & Co WFC.N dropped more than 2 percent to $29.19 after the fifth-largest U.S. bank said it would take a $1.4 billion charge in the fourth-quarter due to mortgage losses. [ID:nWEN2714]

Wells Fargo shares had risen 1.2 percent to close on the NYSE at $29.83.

Shares of Freddie Mac FRE.N also fell in after-hours trading after the No. 2 U.S. home financing provider said it would slash its divident by 50 percent and would raise $6 billion through the sale of preferred stock. [ID:nWNAS3253]

OIL BOOST

During the regular session, GE shares finished up 2 percent up at $37.45 on the NYSE. The drop in oil prices helped calm worries about the impact of higher energy costs on businesses, as well as on consumers.

Shares of Wal-Mart Stores Inc WMT.N finished up 1.8 percent at $45.83, and were among the top contributors to the Dow's advance. Shares of Staples SPLS.O jumped 10.6 percent to $21.85 on the Nasdaq after the office supply retailer reported quarterly profit that topped analysts' estimates. [ID:nN27461929].

The S&P retail index .RLX climbed 1.8 percent.

Altria Group Inc MO.N, parent of the Philip Morris tobacco companies, was another standout on the Dow, rising 2.7 percent to $73.35. Companies that make consumer staples, such as cigarettes, fast food and soft drinks, are seen as better investments in the face of a slowing economy.

Technology shares also rebounded, led by sector bellwethers, including iPod and iPhone maker Apple Inc AAPL.O, whose stock gained 1.3 percent to $174.81, and chip maker Intel Corp INTC.O, whose stock gained 3.0 percent to $25.11 on the Nasdaq.

CONSUMER WORRY

The market advanced despite economic reports and comments from key officials pointing to uncertainty about the outlook, including a decline in consumer confidence to a two-year low.

The Conference Board said its index fell to its lowest in two years on concerns about rising gas prices and financial market volatility.

In addition, U.S. existing single-family home prices, as measured by the S&P/Case-Shiller index on Tuesday, suffered the largest quarterly decline in the index’s 21-year history. [ID:nN27484027]

Federal Reserve Bank of Philadelphia President Charles Plosser said that uncertainty about the economy was increasing. Allan Hubbard, a top White House economic adviser, also said risks of a recession have risen. [ID:nN27492513]

Trading was moderate on the NYSE, with about 1.65 billion shares changing hands, below last year’s estimated daily average of 1.84 billion. On Nasdaq, about 2.24 billion shares changed hands, above last year’s daily average of 2.02 billion.

Advancing stocks outpaced decliner by a ratio of about 9 to 5 on the NYSE and by 5 to 4 on the Nasdaq.

On Monday, major U.S. stock indexes slid 10 percent or more below 52-week highs set last month as investors worried about the impact of the credit crisis. (Editing by Jonathan Oatis)