* Facebook buys Oculus for $2 billion; shares fall
* King Digital plunges in trading debut
* Dow off 0.36 pct; S&P off 0.38 pct; Nasdaq off 0.96 pct (Updates to afternoon trade)
By Angela Moon
NEW YORK, March 26 (Reuters) - U.S. stocks edged lower in the afternoon on Wednesday, led by losses in the materials and technology sectors.
Trading was choppy with U.S. stocks mostly positive in the morning after U.S. economic data pointed to improving conditions. But they reversed course in the afternoon as technology stocks turned sharply lower.
Facebook Inc shares were off more than 5 percent at $61.71, a day after the social media giant announced it will acquire two-year-old Oculus VR Inc, a maker of virtual-reality glasses for gaming, for $2 billion.
A sharp decline in the stock of King Digital Entertainment Plc, maker of the wildly popular "Candy Crush Saga" game, also weighed on investor sentiment.
The stock fell nearly 20 percent to $19.64 in its trading debut on Wednesday after the company's initial public offering valued it at about $6 billion. King was the most actively traded stock on the New York Stock Exchange.
The technology sector seemed to be weighing on the market, contributing to the recent trend of the market opening positive but seesawing between gains and losses throughout the day, said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York.
"(The tech sector) is causing a lot of volatility," he said.
The CBOE Volatility index, a widely used gauge of investor sentiment on Wall Street, rose 3.9 percent to 14.57. The index usually moves inversely to the S&P 500.
Biotech stocks, which have seen steep declines recently, extended their losses. The Nasdaq biotechnology index was down 1.5 percent at 2,464.33.
The Dow Jones industrial average was down 59.01 points, or 0.36 percent, at 16,308.87. The Standard & Poor's 500 Index was down 7.01 points, or 0.38 percent, at 1,858.61. The Nasdaq Composite Index was down 40.74 points, or 0.96 percent, at 4,193.53.
DirectTV shares were up 7.1 percent at $78.39 and Dish Network Corp shares were up 8.2 percent at $63.02. Dish Chief Executive Charlie Ergen recently contacted DirecTV CEO Mike White to discuss a possible tie-up, Bloomberg reported, citing sources familiar with the matter.
The S&P materials sector was off 1.1 percent, the biggest decliner among ten S&P sectors. Healthcare stocks ranked among the strongest of the day, with the S&P healthcare sector index up 0.4 percent.
Orders for durable goods rose more than expected in February, ending two straight months of declines. Another report showed private-sector economic activity accelerated in March at a faster clip than in February as the services sector picked up, according to financial data firm Markit's preliminary composite Purchasing Managers Index.
U.S. President Barack Obama said the United States and the European Union agreed to work together to prepare possible tougher economic sanctions in response to Russia's behavior in Ukraine, including on the energy sector, and to make Europe less dependent on Russian gas.
(Reporting by Angela Moon; Editing by Nick Zieminski)