* ADP jobs report, services survey top expectations
* European officials show readiness to prop up banks
* Dow up 0.8 pct, S&P up 1.2 pct, Nasdaq up 1.9 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to early afternoon)
By Caroline Valetkevitch
NEW YORK, Oct 5 (Reuters) - U.S. stocks advanced on Wednesday as better-than-expected U.S. economic data and signs that officials were moving forward to help struggling European banks reassured nervous investors.
European finance ministers expressed a new sense of urgency about the region’s financial crisis and appeared ready to prepare a plan to recapitalize banks. For details, see [ID:nL5E7L51U3]
The move higher followed a late rally on Tuesday after European Union officials said they would act to safeguard banks.
The deepening debt crisis in Europe has been among the biggest stock market pressures, along with signs a recovery in the already weak U.S. economy was stalling.
“It was very clear that sentiment was extremely weak and needed some support, and they found support in news that EU officials were looking for ways to recapitalize the banks,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
At the same time, Wednesday’s U.S. data “doesn’t suggest ... that more selling is called for at this point.”
The U.S. private sector added 91,000 jobs in September, according to the ADP National Employment Report, topping forecasts and increasing optimism about Friday’s non-farm payrolls report from the Labor Department. [ID:nN1E794098]
The Institute for Supply Management said the U.S. economy’s services sector expanded in September, slightly faster than forecast by a Reuters poll. [ID:nN1E79407S]
Materials, energy and industrials, sectors tied to economic growth, were the top-performing stocks. The S&P materials index .GSPM gained 2 percent.
The Nasdaq outperformed the other two major indexes, led by gains in Research in Motion Ltd RIMM.O, up 13.7 percent at $23.87 on speculation the BlackBerry maker could be acquired.
The Dow Jones industrial average .DJI was up 88.33 points, or 0.82 percent, at 10,897.04. The Standard & Poor's 500 Index .SPX was up 13.48 points, or 1.20 percent, at 1,137.43. The Nasdaq Composite Index .IXIC was up 46.31 points, or 1.93 percent, at 2,451.13.
Over the last six sessions, the S&P has fallen 10 percent, and on Tuesday it fell into bear market territory, marking a 20-percent drop from its recent high.
In that fall, the S&P 500 broke support at 1,120 but held above that level on Wednesday.
But investors who bet against the market were forced to cover short positions as equities rallied strongly late in the day.
“It seems unlikely that we’ve reached an ultimate bottom here, and so we’re fairly defensively positioned,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
On the downside were shares of warehouse club operator Costco Wholesale Corp (COST.O), which fell 2.5 percent to $79.64. It reported fourth-quarter earnings and revenue that missed expectations.
Volume in early afternoon trading was 5.2 billion, with advancers beating decliners on the New York Stock Exchange by about four to three, while on the Nasdaq winners topped losers by about 13 to 10. (Editing by Padraic Cassidy)