Stocks pared their losses on Wednesday while the dollar extended its gains against the euro after the Federal Reserve gave a positive assessment of U.S. economic conditions.

Oil prices rose, reversing a weaker trend from earlier in the session forced by concerns over a rise in U.S. crude stockpiles.

On Wall Street, the Dow Jones industrial average was down 14.23 points, or 0.11 percent, at 12,990.89. The Standard & Poor's 500 Index was down 1.85 points, or 0.13 percent, at 1,370.33. The Nasdaq Composite Index was down 10.14 points, or 0.34 percent, at 2,976.62.

The benchmark 10-year U.S. Treasury note was down 12/32, the yield at 1.9809 percent.

The Fed said the U.S. economy expanded modestly in January through mid-February as hiring picked up a bit across several districts. The central bank maintained the cautious upbeat tone from its previous report, but pointed to some improvements in the battered housing sector.

An hour before the close, the Dow Jones industrial average was down 13.13 points, or 0.10 percent, at 12,991.99. The Standard & Poor's 500 Index was down 1.47 points, or 0.11 percent, at 1,370.71. The Nasdaq Composite Index was down 5.56 points, or 0.19 percent, at 2,981.20.

The dollar rose nearly 1 percent against the euro, touching $1.3469 after an intraday high at $1.3388.

In oil trading, London's Brent rose 1 percent to $122.72 a barrel while U.S. crude settled up half a percent at $107.07.

(Editing by Dan Grebler)