Manufacturing sector growth slows: ISM

NEW YORK (Reuters) - U.S. manufacturing expansion slowed in August from the previous month as a decline in new orders had factory managers opting for caution, according to the Institute for Supply Management on Tuesday.

The industry group said its index of national factory activity eased to 52.9 last month, its lowest since March and down from 53.8 in July.

Analysts had been looking for a more modest dip to 53.0, although any reading above 50 still points to expansion.

U.S. stocks edged higher following the release of the data, while bond prices were little affected by the numbers and continued to trade mixed.

"Markets have been on edge for negative growth news so this morning's numbers came as a little bit of relief (for stocks)," said John Shin, senior economist at Lehman Brothers in New York.

The ISM's new orders index fell to 55.3 from 57.5, while the employment measure edged up to 51.3 from 50.2 in July.

Prices paid declined to 63.0 from 65.0, providing some evidence that softer growth is putting a damper on inflation.