US stocks rose modestly after profit taking unravelled early strong gains following a report which showed that April whole sale prices had shown the biggest decline in nearly four years.

The report signalled that the economy was continuing to grow with few signs of outright inflation and sent the bond market soaring as investors bet the federal reserve would have fewer motives to raise interest rates at Open Markets Committee meeting next week. Wall Street , which had expected the April data to come in unchanged, was caught offguard by the 0.6 per cent drop.

The news sent the Dow Jones industrial average soaring 77 points in early trade, but a bout of profit taking late in the day negated nearly all of the index's early gains, even dropping into negative territory shortly before the end of the session.

The Dow Jones closed up almost 12 points on 7286.16, having hit a new intraday high of 7351 earlier in the session and spending most of the day above 7,300.