* Most schools in Connecticut town reopen
* Sandy Hook Elementary to remain closed
* Funerals continue for young victims
* Retailer Dick's pulls guns from shelves
By Edward Krudy and Peter Rudegeair
NEWTOWN, Conn., Dec 18 Students returned to school in the shattered Connecticut town of Newtown on Tuesday for the first time since a gunman's rampage killed 26 people in an elementary school, altering the gun control debate in Washington and forcing a retailer to pull guns from shelves.
Sandy Hook Elementary, where 20-year-old Adam Lanza gunned down a score of 6- and 7-year-olds and six adults on Friday, will remain closed. It is an active crime scene, with police coming and going past a line of 26 Christmas trees, one for each victim, decorated with ornaments, stuffed animals and balloons in the school colors of green and white.
When Sandy Hook students go back to school, it will be at the unused Chalk Hill School in nearby Monroe, where a sign across the street read, "Welcome Sandy Hook Elementary!"
Police have warned it could take months for them to finish their investigation, which was set back because Lanza smashed his computer's hard drive, preventing police from retrieving any data, The New York Times reported, citing a senior law enforcement official.
The rest of Newtown's schools reopened with grief counselors and police present, though it was unclear how many of the town's 4,700 students would attend.
"It's going to be awful, doing the things we used to do," said Miguel, 16, who stopped by a doughnut shop on his way to Newtown High School. "There's going to be a lot of tears."
The massacre of young children shocked Americans who had grown accustomed to mass shootings, prompting some U.S. lawmakers to call for tighter gun restrictions and pressuring one private equity firm to sell its investment in a gunmaker.
In addition, Dick's Sporting Goods pulled all guns from its store closest to Newtown and suspended the sale of certain semi-automatic rifles in its stores nationwide.
Wal-Mart Stores Inc took down an informational website about semi-automatic Bushmaster rifles.
Cabela's Inc continued to sell the model used by Lanza - a Bushmaster AR-15 semi-automatic rifle - on its website.
President Barack Obama, who called for action at a Sunday night prayer vigil in Newtown, held talks with Vice President Joe Biden and three Cabinet members on Monday in what a White House official said was an effort to "begin looking at ways the country can respond to the tragedy in Newtown."
Several Democratic lawmakers have sought a new push for U.S. gun restrictions, including a ban on assault weapons such as the Bushmaster AR-15 used by Lanza, who carried hundreds of rounds of ammunition in extra clips and shot all of his victims repeatedly, one of them 11 times. Lanza also shot dead his mother before driving to the school, and then killed himself to end the massacre with a death toll of 28.
The nation's powerful gun industry lobby, the National Rifle Association, has remained silent on the Newtown shooting.
U.S. private equity firm Cerberus Capital Management announced it was selling its investment in gunmaker Freedom Group following pressure from a major investor, the California State Teachers' Retirement System (CalSTRS), which said on Monday it was reviewing its investment with Cerberus.
CalSTRS, the second largest pension fund in the United States, had invested $751.4 million with Cerberus by the end of March 2012, according to its website. Cerberus bought firearms maker Bushmaster in 2006 and later merged it with other gun companies to create Freedom Group.
NEWTOWN BURIES ITS CHILDREN
While politicians and investors grappled with the future of the U.S. gun industry, police and educators in Newtown tried to ease their bucolic town back to normal.
A day after the first two children were buried, funerals were expected Tuesday for victims including James Mattioli and Jessica Rekos. Each was 6 years old.
At Newtown High School, a group of three girls hugged each other in the parking lot before starting for the doorway.
Arriving students were greeted at the main entrance by a clutch of school staff, one calling warmly: "Welcome back, guys." Uniformed police officers stood in the entrance and guarded the drive up from the street.
School began two hours later than normal and students were to attend all-school assembly. Counseling was available in the gym for students and staff, Principal Charles Dumais said in a blog posting titled, "The Beginning."
"Our collective strength and resilience will serve as an example to the rest of the world," Dumais wrote. "Be strong, Newtown."
Nanci Wallenta, taking her friend's son to middle school, said she was unworried about security and determined to get back to normal.
"It's an isolated incident," Wallenta said. "You can't go through life being afraid. You can't live in fear. ... We're a strong town."