Dow, S&P cut losses from China move, Nasdaq flat

The Dow and S&P edged lower on Friday after a surprise move by China to restrict bank lending, while the Nasdaq was little changed as strength in technology shares offset other losses.

The hike by China in bank reserve requirements is the second increase in as many months and raised worries about the impact of monetary tightening on global growth.

The move suggests that China considers inflation to be a concern, which is negative, but they're beyond worrying about jobs and growth, which indicates some progress, said Carl Birkelbach, head of Birkelbach Management in Chicago.

Markets initially fell as much as 1 percent on China's move, as well as on weaker-than-expected data on U.S. consumer sentiment and business inventories.

The China policy move boosted the U.S. dollar and knocked commodity prices and resource stocks lower. Crude oil futures fell 2.1 percent to $73.70 a barrel.

Worries over high unemployment eroded consumer sentiment early this month. The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, below analysts' expectation of 75.0.

The data is another sign that the economy isn't in a v-shaped recovery, Birkelbach said. Right now it looks like there's a lot more downside risk than upside risk.

The Dow Jones industrial average was down 44.67 points, or 0.44 percent, at 10,099.60. The Standard & Poor's 500 Index was down 3.04 points, or 0.28 percent, at 1,075.43. The Nasdaq Composite Index was up 1.35 points, or 0.06 percent, at 2,178.71.

The Nasdaq was lifted by Research in Motion , which rose 2.5 percent to $70.93 after Wedbush Morgan started coverage on the stock with an outperform rating, saying the stock was exceptionally well positioned in the current environment.

The top drag on the Dow was 3M Co , which fell 1.6 percent to $79.01 after Bank of America-Merrill Lynch downgraded the stock to underperform, expecting slower growth over the coming cycle.

Ingersoll-Rand Plc shed 7.1 percent to $31.50 after it reported fourth-quarter earnings that missed Wall Street's expectations and gave a first-quarter profit view that was below consensus.

Gainers included Agilent Technologies , which rose 2.5 percent to $30.09 after reporting better-than-expected first-quarter earnings and giving a strong profit outlook.

(Editing by Kenneth Barry)