US STOCKS-Summers' withdrawal lifts Wall Street; Obama tempers gains
* Summers in surprise withdrawal from Fed chair consideration
* Fed to meet this week for decision on stimulus' future
* Housing-related stocks rally on mortgage rates bets
* Indexes: Dow up 0.74 pct, S&P up 0.56 pct, Nasdaq off 0.14 pct
NEW YORK, Sept 16 (Reuters) - U.S. stocks advanced on Monday and the S&P 500 touched a six-week high after former Treasury Secretary Lawrence Summers withdrew as a candidate to be Federal Reserve chairman, removing market uncertainty about what was shaping up to be a contentious confirmation process.
But equities pared gains after President Barack Obama stood firm in warning Republicans in Congress he will not negotiate over an extension of the U.S. debt ceiling as part of a budget fight.
"We are still riding positively on the Summers announcement, however with the debt ceiling deadline less than a couple of weeks away, there will be heightened sensitivity to it," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.
"We are still up and the market is still riding a wave higher and until there is something tangible to create a sense of fear, the trend remains solid."
Adding to investor angst, at least four major U.S. options exchanges, including the Nasdaq OMX PHLX and CBOE Holdings halted trading in the early afternoon due to system issues at the centralized Options Price Reporting Authority, the latest prominent disruption to the operations of U.S. markets.
Investors initially cheered the Summers decision, as the move likely means an easier path for the eventual nominee for the Fed chief position, and it also has added to expectations that the Fed will continue its current accommodative path. Summers was seen as more prone to wind down stimulus than the new front-runner, Fed Vice Chairwoman Janet Yellen.
Summers' surprise decision on Sunday came just days before the U.S. central bank will meet to decide when, and by how much, to scale back its bond purchases, or quantitative easing.
Housing stocks climbed as investors bet on downward pressure on mortgage rates. The PHLX housing index climbed 1.8 percent. Among individual stocks, D.R. Horton jumped 4.3 percent to $19.96.
The Dow Jones industrial average rose 113.5 points or 0.74 percent, to 15,489.56, the S&P 500 gained 9.37 points or 0.56 percent, to 1,697.36 and the Nasdaq Composite dropped 5.065 points or 0.14 percent, to 3,717.119.