* Weekly initial jobless claims up for second week
* Mortgage delinquencies climb in second quarter
* Philly Fed index snaps 10-month of contraction
* Chinese equities rebound
(Updates to mid-morning)
By Edward Krudy
NEW YORK, Aug 20 (Reuters) - U.S. stocks rose on Thursday after a snap back in Chinese equities offset a surprise rise in weekly jobless claims and other data that showed a mixed picture of the economy.
The rally in the Chinese stock market, which had fallen as much as 20 percent in the last two weeks, helped eased fears about a key driver of the global economy.
The U.S. earnings picture was mixed as packaged food makers H.J. Heinz Co and Hormel Foods Corp both beat Wall Street estimates while retailer Sears Holding Corp posted a surprise loss, sending its shares down 11 percent.
"I think (China) has given a boost to the U.S. market by the snap back yesterday, but I expect the Chinese market to consolidate more over the next weeks," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
Shares of AIG Inc rose 30 percent to $34.70 after newly appointed Chief Executive Robert Benmosche said he expects the bailed-out insurer to be able to repay its federal debts and boost value for shareholders, according to a report by Bloomberg News.
The Dow Jones industrial average was up 42.39 points, or 0.46 percent, at 9,321.55. The Standard & Poor's 500 Index was up 8.49 points, or 0.85 percent, at 1,004.95. The Nasdaq Composite Index was up 15.47 points, or 0.79 percent, at 1,984.71.
U.S. mortgage delinquency rates continued to climb in the second quarter, while the percentage of loans that entered the foreclosure process dipped slightly, the Mortgage Bankers Association said.
Initial claims for state unemployment insurance benefits rose by 15,000, when analysts polled by Reuters had forecast new claims slipping.
But factory activity in the U.S. Mid-Atlantic region turned positive in August, breaking a 10-month run of contraction, helped by a jump in new orders, a survey by the Philadelphia Federal Reserve Bank showed.
Shares in Heinz rose 2.5 percent to $38.87, while Hormel gained 1.2 percent to $37.65.