Dow Jones: 12,491.61 (+44.73) Nasdaq: 2,796.92 (+15.01) SP 500: 1,317.72 (+4.08)

US STOCKS pared gains yes-terday, almost erasing a 164-point rise in the Dow Jones Industrial Average, amid concern lawmakers will fail to raise the federal debt limit, causing a default by the world’s biggest economy.

Materials producers in the Standard and Poor’s 500 Index added 0.7 per cent, trimming an advance of 1.9 per cent, as China’s growth boosted stocks most tied to the prospects for the global economy.

Caterpillar, the world’s largest maker of construction equipment, rose the most in the Dow, gaining 1.6 per cent after rallying as much as 3.3 per cent.

Amazon.com and Netflix climbed at least 0.8 per cent as JPMorgan recommended buying the shares.

The Dow Jones industrial average rose 44.73 points, or 0.36 per cent, to 12,491.61.

The Standard Poor’s 500 Index gained 4.08 points, or 0.31 per cent, to 1,317.72.

The Nasdaq Composite Index advanced 15.01 points, or 0.54 per cent, to 2,796.92.

Freeport-McMoRan Copper Gold rose 2 per cent at $54.89 on heavy volume.

Shares of JPMorgan advanced 0.6 per cent to $39.62 while Google climbed 0.8 per cent to close at $538.26.

Baker Hughes was one of the top energy sector gainers, rising 3.3 per cent to $74.83.

News Corp shares jumped 3.8 per cent to $15.93 and was the Nasdaq’s most active name after announcing it had withdrawn a $12 billion bid to buy the 61 per cent of broadcaster BSkyB it does not already own.

The SP 500 fell for the past three days as concern grew that Europe’s debt crisis will spread and American lawmakers failed to agree on cutting the deficit.

Stocks jumped early yesterday after Ben Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might re-emerge, implying a need for additional policy support," Mr Bernanke said before the House Financial Services Committee in Washington yesterday. – ( Bloomberg/Reuters