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Dow, S&P 500 dip on China lending curb; Nasdaq up

NEW YORK (Reuters) - The Dow and S&P 500 dipped on Friday as China’s move to curb bank lending and U.S. and European economic data raised fears the global recovery might be in jeopardy.

Even so, Wall Street stocks ended off the day’s lows as investors bet the European Union would come up with a clearly defined plan to aid debt-laden Greece and restore confidence in countries using the euro.

Stock laggards included large manufacturers and commodity-related companies, many dependent on Chinese demand. On the Nasdaq, bargain-hunting in technology helped the index to end slightly higher.

But aluminum company Alcoa Inc fell 2.2 percent to $13.28, while conglomerate United Technologies Corp shed 1.5 percent to $65.69 and bellwether General Electric dipped 1.4 percent to $15.55.

An increase in banks’ reserve requirements by China marked the second such rise in as many months. Investors worried China, which has been spearheading the world’s economic recovery, might be pulling back too soon.

“You have the lingering issue of the sovereign debt issue, you have questions regarding growth in Europe, questions concerning one of the main engines of growth, which is China,” said Quincy Krosby, market strategist with Prudential Financial in Newark, New Jersey. “It all adds to uncertainty in the market.”

The Dow Jones industrial average dropped 45.05 points, or 0.44 percent, to 10,099.14. The Standard & Poor’s 500 Index slipped 2.96 points, or 0.27 percent, to 1,075.51. But the Nasdaq Composite Index rose 6.12 points, or 0.28 percent, to 2,183.53.

Snow covers a street sign at the corner of Wall St. and Broad St. in New York's financial district, February 10, 2010. REUTERS/Brendan McDermid

Markets also fell on weaker-than-expected data on U.S. consumer sentiment and business inventories and on euro zone gross domestic product.

Worries over high unemployment eroded consumer sentiment early this month. The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, below analysts’ expectation of 75.0.

Nevertheless, the major stock indexes ended the week higher, halting a four-week string of declines, thanks in part to investors scouring for shares in the beaten-down sectors, particularly technology. Both the Dow and the S&P 500 rose 0.9 percent, while the Nasdaq climbed 2 percent.

“There may be a bit of buying and positioning going into the 3-day weekend, assuming that the EU can iron out issues and finalize agreements to help Greece,” said Dennis Cajigas, senior market strategist at Lind-Waldock, a retail brokerage firm, in Chicago. Euro zone finance ministers are scheduled to meet on Monday when U.S. financial markets will be closed for Presidents Day.

Earlier on Friday indexes had fallen more than 1 percent.

Data showed the euro zone’s gross domestic product barely expanded in the fourth quarter compared with the previous quarter, missing economists’ forecasts.

The Nasdaq’s top boosts included BlackBerry maker Research in Motion, which rose 3.1 percent to $71.33 after Wedbush Morgan started coverage with an “outperform” rating, saying the stock was exceptionally well positioned.

The top drag on the Dow was 3M Co, which fell 1.4 percent to $79.18 after Bank of America-Merrill Lynch said it expected slower growth from the manufacturer in the coming cycle.

Ingersoll-Rand Plc, which makes climate-control systems, shed 7.8 percent to $31.26 after it reported fourth-quarter earnings that missed Wall Street’s expectations and gave a first-quarter profit view that was below consensus.

Total volume of 8.45 billion was traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 7 to 6, while on the Nasdaq, about three stocks rose for every two that fell.

Editing by Kenneth Barry

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