Oil prices fall pressuring stocks

By Herbert Lash

NEW YORK (Reuters) - Commodity prices slipped on Wednesday as confidence in a swift recovery ebbed, helping pull down stock markets in Europe, while crude oil fell toward $70 a barrel on a surprise increase in U.S. gasoline supplies.

A tame reading of U.S. consumer prices helped lift the price of inflation-sensitive government debt on both sides of the Atlantic, and helped spur weakness in the U.S. dollar.

Amid doubts about economic recovery, benchmark dollar bank lending rates set record lows on Wednesday in an environment of easier credit conditions with few disruptions seen in the interbank market before the end of June.

U.S. stocks rebounded at midday after a downgrade of 22 banks by Standard and Poor's and a disappointing earnings outlook from economic bellwether FedEx Corp (FDX.N: Quote, Profile, Research) weighed on Wall Street earlier in the session.

The Nasdaq rose more than 1.0 percent as investors snapped up technology shares after a two-day sell-off, while both the Dow and the S&P 500 clung to modest gains as healthcare advanced.

Tech shares were helped after Goldman Sachs added chipmaker Qualcomm (QCOM.O: Quote, Profile, Research) to its "conviction buy" list while Banc of America Securities-Merrill Lynch upgraded to "buy" from "underperform" rival Texas Instruments (TXN.N: Quote, Profile, Research).

Networking equipment maker Cisco (CSCO.O: Quote, Profile, Research) also underpinned a tech rally after Chief Executive John Chambers said business conditions were improving.

At 1 p.m. (1700 GMT), the Dow Jones industrial average .DJI was up 14.51 points, or 0.17 percent, at 8,519.18. The Standard & Poor's 500 Index .SPX was up 0.56 points, or 0.06 percent, at 912.53. The Nasdaq Composite Index .IXIC was up 12.53 points, or 0.70 percent, at 1,808.71.