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US STOCKS-Wall St down as China worries offset energy shares

Published 08/19/2009, 11:23 AM
Updated 08/19/2009, 11:27 AM
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* China stocks weigh on global equities

* Oil helps lift energy stocks

* Indexes down: S&P 0.1 pct, Dow 0.1 pct, Nasdaq 0.3 pct

(Updates to late morning)

By Edward Krudy

NEW YORK, Aug 19 (Reuters) - U.S. stocks slipped on Wednesday as a drop in Chinese shares prompted renewed selling in global equity markets on fears stock prices have outpaced the economic recovery.

But heavier losses earlier in the session were tempered by gains in energy shares after a government report showed U.S. crude stockpiles logged a steep surprise decline as imports dropped sharply and domestic refiners boosted operations.

Oil futures posted a 2 percent rise after weekly data from the U.S. Energy Information Administration, boosting shares in energy companies such as Exxon Mobil Corp, which climbed 1.3 percent and was the top boost to the Dow industrials.

"The rise in oil prices is erasing some of the pessimism that we've had about recovery in the past few days," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.

The data helped shares recover from a near 1 percent slide earlier in the day prompted by another sell-off in Chinese stocks, which have fallen 20 percent in the last two weeks on concerns prices have advanced beyond the pace of an economic recovery.

The Dow Jones industrial average dropped 12.39 points, or 0.13 percent, to 9,205.55. The Standard & Poor's 500 Index fell 1.41 points, or 0.14 percent, to 988.26. The Nasdaq Composite Index lost 6.00 points, or 0.31 percent, to 1,949.92.

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Also weighing on the market, Hewlett-Packard Co warned about demand from businesses after narrowly beating analysts estimates after the bell on Tuesday, while agricultural equipment maker Deere & Co, which posted better-than-expected earnings before the bell, said it expected to barely break even in the fourth quarter.

Hewlett-Packard shares fell 1.2 percent to $43.43, while Deere lost 4.5 percent to $43.08.

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