Banks lead Wall Street's tepid rebound

The index dropped 2.2 percent yesterday, its biggest drop since a 2.5 percent fall on June 1, as evidence mounted of slowing manufacturing growth worldwide.

Bank shares, among the worst hit yesterday, rose after ratings agency Moody's lowered credit ratings on the world's top banks by one to three notches to reflect their risk of losses from volatile capital market activities.

The S&P 500 index is down 0.9 percent for the week, but remains on track for its first monthly gain since March.

The Dow Jones industrial average rose 54.12 points, or 0.43 percent, at 12,627.69. The Standard & Poor's 500 Index was up 4.71 points, or 0.36 percent, at 1,330.22. The Nasdaq Composite Index was up 16.39 points, or 0.57 percent, at 2,875.48.

In Europe, European shares fell for a second day as new weak economic data fuelled a further selloff in cyclical shares, leaving the market facing a period of consolidation. The FTSEurofirst 300 index ended 0.7 percent lower at 1,001.89 points, although it was still up 0.9 percent for the week, which was marked by an early rally on expectations the Federal Reserve would introduce further monetary support, and relief at the formation of a pro-bailout government in Greece.

In Asia, Nikkei average slipped as investors brooded over flagging manufacturing activity in the United States, Europe and China, but the key share index still sneaked in its best weekly gain in four months.

The Nikkei fell 0.3 percent to 8,798.35 points after hitting its highest closing level in five weeks yesterday, but managed to end up 2.7 percent on the week, the biggest weekly gain since mid-February. The broader Topix slipped 0.4 percent to 750.92.