(Reuters) - Lowe's Companies Inc (LOW.N) put aside $5 billion to buyback its shares over the next two to three years, joining a string of companies digging into their cash reserves to shore up their stocks in a weak economy.

Shares of Lowe's, which is the second largest U.S. home improvement chain behind Home Depot Inc (HD.N), rose as much as 3 percent on Monday morning in a broader market rally .SPX.

However, it is unclear if the repurchase, which represents about a fifth of Lowe's current market value, will prop up its stock that had fallen 23 percent this year through Friday.

The company's stock has taken a hit as many U.S. shoppers have stayed away from expensive renovations in light of falling housing prices and homebuilder sentiment remained stuck near historic lows in August.

Home Depot's announcement of a $1 billion share repurchase in late March initially boosted the stock, but it is down 15 percent since as home improvement chains found it harder to sell their wares to homeowners.

U.S. companies are increasingly using their cash to buy back their own shares, betting on a Wall Street rebound. As of August 11, U.S. companies had bought back $305.2 billion in shares this year, eclipsing the $300.7 billion total for all of 2010 and two-and-a-half times the 2009 amount.

Lowe's, which has declared a cash dividend each quarter since going public in 1961, also set a regular quarterly dividend of 14 cents a share. It raised its divided by 27 percent in May.

Last week, the retailer reported weaker-than-expected quarterly sales and cut its fiscal-year outlook for the second time in three months as homeowners put off big renovations in an anemic U.S. economy.

(Additional reporting by Jochelle Mendonca in Bangalore; Editing by Viraj Nair)

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