Stocks held onto early losses on Friday as consumer sentiment slipped in early February and government data showed business inventories fell unexpectedly.

The Dow Jones industrial average <.DJI> dropped 135.96 points, or 1.34 percent, to 10,008.23. The Standard & Poor's 500 Index <.SPX> fell 13.41 points, or 1.24 percent, to 1,065.06. The Nasdaq Composite Index <.IXIC> lost 19.69 points, or 0.90 percent, to 2,157.72.

Commerce Department seasonally adjusted data on U.S. business inventories and sales posted a 0.2 percent drop, with a Reuters poll showing expectations of a 0.2 percent rise.

The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, down from 74.4 in late January but up from 56.3 a year ago.

Wall Street fell at the open after China surprised global markets by increasing banks' reserve requirements, raising worries about the impact of a monetary tightening on global growth and driving investors away from risky assets.

(Reporting by Rodrigo Campos; Editing by Padraic Cassidy)