US stocks rise, reversing early losses (AFP)

NEW YORK (AFP) – US stocks rose on Wednesday, rebounding from early losses and shaking off news of a Chinese interest rate hike and fresh eurozone debt worries to close higher by the end of the day.

The Dow Jones Industrial Average gained 56.15 points (0.45 percent) to close at 12,626.02.

The broader S&P 500 rose 1.34 points (0.10 percent) to 1,339.22, while the tech-heavy Nasdaq Composite was up 8.25 points (0.29 percent) to stand at 2,834.02.

Stocks fell in early trading after China's interest rate move raised expectations of slowing growth in the world's second-largest economy and as worries mounted about Europe's debt crisis.

European Union officials lashed out at the Moody's ratings agency a day after its downgrade of Portugal, while anxious bond investors drove up yields for Spanish and Portuguese government debt.

On Wall Street, blue-chip industrial stocks performed well, with Caterpillar and DuPont leading the Dow with gains of 1.5 percent and 1.4 percent, respectively.

"It's a flight to safety that you are seeing. That is helping the Dow, that has a lot of defensive stocks," said Marc Pado, US market strategist for Cantor Fitzgerald.

Financial stocks were battered, with Bank of America tumbling 2.3 percent, Citigroup falling 1.3 percent and Wells Fargo down 1.1 percent.

Separately, a monthly report showed the US services sector grew in June but not as much as expected, in yet another sign of the sluggishness of the US economic recovery.

The Institute for Supply Management said that its index of non-manufacturing activity was 53.3 in June, down from 54.6 in May. Analysts had forecast that the index would fall to 54.0. Any number above 50 indicates growth.

Investors are avoiding any big moves until Friday's release of the official US employment figure for June, one of the most closely-watched indicators of the health of the US economy, analysts said.

"We get the job number on Friday, that is going to hold back any trading. There is no point in rushing in front of that type of big news," said Pado.

Bond prices rose on Wednesday. The yield on the 10-year US Treasury note fell to 3.10 percent from 3.14 percent late Tuesday, while that on the 30-year bond dropped to 4.35 percent from 4.39 percent.

Bond prices and yields move in opposite directions.