US STOCKS-Wall Street indexes rise after MBIA reassurances

(Updates to early afternoon, changes byline)

By Ellis Mnyandu

NEW YORK, Jan 31 (Reuters) - U.S. stocks rose in choppy trade on Thursday as a rebound in bond insurers' shares spurred buying in the financial sector after executives at a major bond insurer offered reassurances about the company's outlook.

Investors also bought shares of retailers, including Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research) -- up almost 3 percent -- as well as homebuilders and other consumer-oriented companies amid hopes that lower interest rates would ease the housing slump's drag on the economy.

MBIA Inc (MBI.N: Quote, Profile, Research), the world's largest bond insurer, on Thursday reported a fourth-quarter loss of $2.3 billion, or $18.61 a share, compared with a year-earlier profit of $181 million, or $1.32 a share.

Nonetheless, MBIA Chief Financial Officer Edward Chaplin said the bond insurer has sufficient cash on its balance sheet to cover its needs over a two-year period. MBIA shares jumped more than 9 percent in earlier trade.

There is "reassurance from MBIA today that they have sufficient capital to cover its needs," said Tom Sowanick, chief investment strategist for Clearbrook Financial LLC in New York. "Everybody was all over the CNBC report ... that there'd be a major downgrade coming on the monolines and the market has yet to see it."

The Dow Jones industrial average .DJI was up 73.16 points, or 0.59 percent, at 12,515.99. The Standard & Poor's 500 Index .SPX was up 6.80 points, or 0.50 percent, at 1,362.61. The Nasdaq Composite Index .IXIC was up 13.06 points, or 0.56 percent, at 2,362.06.

Even with a bounce, the month could still mark Wall Street's worst monthly finish in more than 5 years.