(Reuters) - Stocks wavered in choppy trade on Wednesday and the euro rebounded on lingering hopes an EU summit could ease the region's debt crisis, despite wide expectations the meeting will disappoint.
Price trends were clearer in commodities and bonds, with oil and copper down on a broad risk-off trade and U.S.
Treasuries rising as investors opted for safe-haven assets. In stocks, razor-thin volumes exaggerated market moves. Wall Street's S&P 500 index fell by up to 1 percent at point before recovering more than half of the dip within minutes.
The volatility followed a rise in U.S. stocks for two straight days on the notion the European Union summit beginning Friday will create a more workable solution to the crisis.
French officials had said earlier this week that French and German leaders will not leave the summit until a powerful deal was reached. But a German government official discounted such hopes on
Wednesday, saying Berlin was getting increasingly pessimistic about the summit.
I think the hopes (for a deal in the summit) are certainly still there. There's a belief in the marketplace that the euro zone doesn't have a death wish, said Art Hogan, managing director at Lazard Capital Markets in New York.
At 2:30 p.m. EST (1930 GMT), the Dow Jones industrial average was up 12.60 points, or 0.10 percent, at 12,162.73. The Standard & Poor's 500 Index was down 2.56 points, or 0.20 percent, at 1,255.91. The Nasdaq Composite Index was down 10.79 points, or 0.41 percent, at 2,638.77.
Since reaching a closing low on Nov. 25, the S&P 500 had risen almost 9 percent through Tuesday on hopes for a credible outcome to the summit. We'll probably keep seeing volatility until we see the
plan, and if it disappoints we could drop 2 or 3 percent, said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
Expectations on the summit have been high, with investors hoping it will help stave off a broader downgrade of European nations by Standard & Poors. The credit rating agency has cautioned that it had 15 of the euro zone's 17 members on a credit watch for a potential downgrade.
Any reticence on the part of Germany is going to be viewed as a setback, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. Lazard's Hogan concurred with that. There is today's news and we started the week with S&P threatening to downgrade. In another time, the market would be down much more than it is.
The euro recovered losses to trade slightly higher against the dollar as investors positioned for a policy setting meeting of the European Central Bank on Thursday. The benchmark 10-year U.S. Treasury note was up 14/32, with the yield at 2.0366 percent.
European stocks were down, giving back early gains. The FTSEurofirst 300 index showed a 0.1 percent loss, after rising 0.6 percent earlier.
Global equities, however, rebounded, with the MSCI world stocks index up 0.1 percent after moving between negative and positive territory. Crude oil prices in London fell more than a dollar
to below $110 a barrel, pressured by the euro crisis and a surprise jump in U.S. crude stockpiles.
Benchmark copper on the London Metal Exchange closed down $15 at $7,820 a tonne. The benchmark 10-year U.S. Treasury note was up 15/32 in price, its yield at 2.0331 percent.