Wall Street pares early gains on weak data, bond market swings

(Reuters) - Wall Street pared early gains in choppy trading as tepid economic data and a renewed selloff in the bond market more than offset a flurry of corporate deals on Wednesday.

U.S. retail sales were unchanged in April as households cut back on purchases of automobiles and other big-ticket items.

Import prices fell for a 10th straight month in April, weekly applications for home mortgages were down and U.S. business inventories barely rose in March.

The data suggested that the U.S. economy was struggling to rebound strongly enough for the Federal Reserve to raise interest rates before September.

Growth in the first-quarter slowed to a crawl due to a strong dollar, harsh winter and a steep fall in oil prices.

"The market is still digesting some of the losses we've seen in the bond market and trying to get their arms around the causes and to see if this trend will continue," said Jeremy Zirin, head of investment strategy at UBS Wealth Management in New York.

"We are seeing some evidence that the weakness in the first-quarter has spilled over to this quarter, but I'm not concerned that U.S. consumer spending for the year is at risk."

The bond market was gripped by a fresh bout of selling, sending yields on 10-year U.S. Treasuries higher.

Half of the 10 major S&P 500 sectors rose, led by the technology index <.SPLRCT>, which was up 0.6 percent.

Microsoft's 1.4 percent jump provided the biggest boost to the index as Deutsche Bank raised its rating on the stock to "buy" from "hold".

The utilities index <.SPLRCU>, which lost 0.7 percent, fell the most, with both Duke Energy and Exelon down nearly 1 percent.

At 11:41 a.m. ET (1541 GMT) the Dow Jones industrial average <.DJI> was up 5.71 points, or 0.03 percent, at 18,073.94, the S&P 500 <.SPX> was up 2.41 points, or 0.11 percent, at 2,101.53 and the Nasdaq Composite <.IXIC> was up 11.60 points, or 0.23 percent, at 4,987.79.

Macy's fell 2.1 percent to $63.97, while Ralph Lauren was down 2.9 percent at $129.24 after reporting results.

Pall Corp rose 4.7 percent to $124.25 after Danaher said it will buy the air and water-filter maker in a $13.8 billion deal. Danaher was up 2 percent at $87.73.

Shares of pipeline company Williams Partners LP jumped 21 percent to $57.34 after Williams Cos said it would buy its affiliate for about $13.8 billion.

Owens-Illinois rose 8.9 percent to $25.92 after the glass container maker said it would buy the food and beverage glass container business of Mexico's Vitro SAB de CV for $2.15 billion.

"M&A will continue to be strong as companies are more confident about spending excess cash and as debt continues to be cheap," said Jeff Kravetz, regional investment director at U.S. Bank Wealth Management in Phoenix, Arizona.

"Energy and industrials should see the most number of deals at the year progresses."

DuPont shares fell 7.3 percent to $69.38 despite the company winning a board proxy fight against Nelson Peltz's Trian Fund Management.

Earnings expected after the close include Shake Shack , J.C. Penney and Cisco .

Advancing issues outnumbered declining ones on the NYSE by 1,694 to 1,233, for a 1.37-to-1 ratio on the upside; on the Nasdaq, 1,303 issues fell and 1,256 advanced for a 1.04-to-1 ratio favoring decliners.

The S&P 500 index posted 13 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 42 new highs and 22 new lows.

(Editing by Saumyadeb Chakrabarty)