* Defensive sectors lead gains among 11 major S&P sectors
* P&G rises on surprise sales increase
* PayPal eyes best day in two years after results
* Dow rises 1.6 pct, S&P up 1.6 pct, Nasdaq dips 1.6 pct (Updates to early afternoon)
By Medha Singh
Oct 19 (Reuters) - U.S. stocks were slightly higher on Friday as strong earnings from major U.S. companies such as Procter & Gamble helped brush aside growth risk concerns in Europe and political tensions related to Saudi Arabia.
Consumer goods bellwether Procter & Gamble reported a surprise rise in first-quarter sales, sending its shares up 7.1 percent and boosting the consumer staples index by 2 percent.
The sector, which has largely underperformed the broader S&P 500 this year, was set for its biggest daily gain since June 2016. Other defensive sectors such as utilities and real estate rose 1.7 percent and 0.9 percent respectively.
“Some good earnings is leading to a better sentiment today and we are seeing a little bit of a rotation too,” said Chad Oviatt, director of investment management at Huntington Private Bank.
“We are watching the growth versus value relationship and it appears investors are getting a little more defensive in their positioning.”
At 12:57 p.m. ET the Dow Jones Industrial Average was up 80.99 points, or 0.32 percent, at 25,460.44, the S&P 500 was up 5.20 points, or 0.19 percent, at 2,773.98.
The Nasdaq Composite was down 9.99 points, or 0.13 percent, at 7,475.15.
Wall Street has had a rough ride over the last two weeks, suffering one of its worst two-day losses since 2015 on concerns over rising interest rates, trade tariffs and their impact on global growth and demand for stocks.
“We’re going into the weekend and it has been a very busy news week, so probably there is less of an appetite for investors to go into the weekend too optimistic,” Oviatt added.
U.S. stocks fell more than 1 percent on Thursday, weighed down by the European Commission’s warning to Italy and U.S. Treasury Secretary Steven Mnuchin’s decision to pull out of an investor conference in Saudi Arabia.
Among gainers on strong results was PayPal, which soared 8.4 percent and was on track for its best daily gain in two years after the payments company beat quarterly profit estimates.
Schlumberger rose 1.6 percent as its third-quarter profit increased on higher oilfield services demand.
Honeywell pared earlier gains to trade flat as the industrial conglomerate said it was seeing slower growth in China and that trade tariffs would squeeze margins and potentially cost it “hundreds of millions” of dollars in 2019.
“Potential slowdown of global growth due to tariffs between the U.S. and other countries is really very concerning,” said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.
Earnings growth for S&P 500 companies is expected to have increased 22.2 percent in the third quarter, according to Refinitiv data. Of the 84 companies that have reported earnings so far, 78.6 percent have beaten expectations.
Advancing issues outnumbered decliners for a 1.11-to-1 ratio on the NYSE and a 1.63-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and 33 new lows, while the Nasdaq recorded 10 new highs and 141 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva and Shounak Dasgupta)