WASHINGTON (Reuters) House Republicans will propose legislation on Tuesday calling for $260 billion in spending on transportation infrastructure for up to five years, an election-year proposal touted as a job creator in a tough economy.

Transportation Committee Chairman John Mica was due to formally introduce the measure and unveil details for funding road, bridge, and rail improvements at a news conference, his office said.

Additional elements could be tacked on by other committees in coming days, including a plan to authorize the Canada-to-Texas Keystone XL oil pipeline despite the refusal of President Barack Obama to advance the project.

While both Republicans and Democrats agree that Congress must lay out a new long-term blueprint for infrastructure improvements, finding the political common ground to do so in legislation has been difficult in a charged partisan climate and with elections looming in November.

Proponents say the highway bill would create tens of thousands of jobs in the hard-hit construction industry at time when unemployment is stubbornly high.

Transportation and engineering experts have said that the United States is woefully behind on infrastructure spending, especially on bridge repair.

States, which rely on federal reimbursements, have been clamoring for direction from Washington on how to plan and pay for big-ticket projects.

To meet their needs, states and local governments have relied on a string of temporary spending measures from Congress since the last long-term federal funding plan expired in September 2009.

The current temporary spending extension expires on March 31.

Mica’s proposal is far less ambitious than infrastructure measures floated by Obama that went no where in Congress.

In his State of the Union address last week,Cheap Juicy Couture swimwear, Obama proposed that a portion of money saved from war spending be used for infrastructure development. Democrats unsuccessfully pushed a similar idea last fall as part of deficit reduction.

Mica’s plan is likely to be adopted on a party line vote in the Republican-led House. A smaller, two-year bipartisan effort is making its way through the Democratic-controlled Senate.

To pay for Mica’s proposal, the government would continue to tap a trust account funded by gasoline tax receipts. The Highway Trust Fund has shrunk in recent years due to more fuel efficient cars and trucks on the road and less driving overall by motorists in a rough economy.

A Congressional Budget Office report on Tuesday is expected to detail new erosion of the account, congressional officials said.

There are no plans by Republicans or Democrats to increase gas taxes to fortify the trust fund and House committees other than Mica’s are expected to address the shortfall.

Republican leaders said in November they would propose lifting a U.S. ban on new offshore oil and gas drilling and use related royalties to at least help finance any shortfall in infrastructure spending.

The Obama administration has proposed a modest expansion of offshore drilling. But lifting the drilling ban stands virtually no chance of passage in the Senate.

Mica’s plan is also expected to cut government “red tape” in the project approval process and encourage private-sector participation in financing and building infrastructure. The plan also seeks to allow heavier trucks on U.S. highways.

So far, the U.S. government has opened few doors to private investors who mainly seek new tolling or other revenue-raising opportunities to generate a return.

(Reporting By John Crawley; Editing by Eric Beech)

NEW YORK (Reuters) Stocks have strayed from their recent link to euro moves, and the start of U.S. corporate earnings next week could help shift investor focus back to U.S. fundamentals from Europe.

Stocks have traded in line with the euro over the autumn, with both experiencing sharp swings on headlines from the euro zone.

That trend may be changing, and it comes just as investors get their first glimpse at fourth-quarter U.S. earnings.

Aluminum company Alcoa (AA.N) is expected to report Monday after the closing bell, unofficially starting the reporting period for U.S. corporations. JPMorgan Chase (JPM.N) is due to report on Friday, but the bulk of Standard & Poor’s 500 (.SPX) earnings will come in the weeks ahead.

“I think this month we’re probably going to break away and see the pattern of U.S. market trade on U.S. fundamentals rather than in reaction to the euro movement,” said Fred Dickson, chief market strategist, D.A. Davidson & Co. in Lake Oswego, Oregon.

“I think we’re in a time-out period for that (dollar) carry trade, and it will stay a time out for a while.”

The correlation between S&P 500 E-mini futures and the euro, which moved in near lockstep in the fall, has receded. A 22-day moving average of the correlation shows almost no relation between the movements of the two assets.

While the corporate results will be searched for evidence of the European crisis’ impact on overseas sales, they should also bring back more of a focus on what’s happening in the United States, where the economy has been northward bound.

Friday’s U.S. jobs reports was the latest data to suggest the recovery is gathering momentum, with non-farm payrolls rising in December and the jobless rate dropping to a near three-year low of 8.5 percent.

S&P 500 fourth-quarter earnings are expected to have risen 7.8 percent from a year ago, according to Thomson Reuters data. But that number is down from a July 1 forecast for growth of 17.6 percent in the quarter.

“We’re going to need good,Cheap Juicy Couture, strong positive news on earnings to lift all three of the market averages out of their trading ranges,” Dickson said. “They’re bumping into some overhead resistance, and it’s going to take fundamental news to do it.”

The S&P 500 ended virtually unchanged for 2011, even though most strategists had expected gains for the year.

The index has been unable to pierce through 1,285, the closing high set in late October.

Stocks ended with gains for the first trading week of the year, as the mostly upbeat U.S. economic data offset lingering worries about the euro zone. The Dow Jones industrial average (.DJI) was up 1.2 percent for the week, the Standard & Poor’s 500 (.SPX) was up 1.6 percent and the Nasdaq (.IXIC) was up 2.7 percent.

Next week’s economic calendar includes data on U.S. retail sales and consumer sentiment.

Even with a focus on earnings, investors will be watching Italian and Spanish government bond sales next week.

Both are seen as the year’s first big funding tests for struggling euro zone countries. Italy is to pay out 100 billion euros in bond coupons and redemptions in the first four months of 2012.

“Ultimately, the market is still progressing towards a test of the (European Central Bank’s) reluctance to be a lender of last resort. I don’t know that the test will get that far, but I think it will,” said David Joy, chief market strategist at Ameriprise Financial in Boston, where he helps oversee $571 billion in assets under management.

On the earnings front, while all 10 S&P 500 sectors have seen profit estimates cut since July, materials and financials have been the hardest hit. Based on a July forecast, the financial sector was expected to show year-over-year growth of 36.6 percent in the fourth quarter, but the latest forecast is for growth of just 10.1 percent, according to Thomson Reuters data.

Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, which manages about $13 billion, said she has been overweight U.S. equities since the autumn and is considering shifting money into some smaller and midcap names.

“Additional positive momentum in the U.S. can offset additional negative momentum in Europe in terms of earnings impact on U.S. companies,” she said.

“Net net it might spell somewhat better relative performance for U.S. small and midcaps versus the large caps,” she said. “Large caps may give up some of their leadership this year as the U.S. economy continues to gain momentum and small caps start to benefit from that acceleration.”

(Reporting By Caroline Valetkevitch; additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)