Commodity fall sparks flight from stocks

US stocks nearly erased a three-day rally as energy and other commodity shares sank, feeding worries about the market's ability to stay on its upward path.

The Dow Jones industrial average was down 130.33 points, or 1.02 percent, at 12,630.03. The Standard & Poor's 500 Index was down 15.08 points, or 1.11 percent, at 1,342.08. The Nasdaq Composite Index was down 26.83 points, or 0.93 percent, at 2,845.06.

European shares rose, boosted by solid corporate earnings, although fund managers said short-term index moves would prove volatile until the euro zone peripheral debt situation is resolved.

The pan-European FTSEurofirst 300 index of top shares closed up 0.3 percent at 1,153.41 points, paring earlier gains after Wall Street opened lower on weaker results.

Japan's Nikkei rose for a second straight day, boosted by gains in companies that provided positive outlooks for the current business year such as Orix Corp and NEC Corp, while investors largely shrugged off slightly stronger-than-expected inflation data from China.

The market was also bolstered by resilient commodity shares,gained despite a brief drop in Brent crude prices after Chinese output and loan data hinted at slowing demand. Orix gained 4 percent and NEC jumped almost 5 percent after predicting rises in their net profits for the current business year. Many Japanese companies have failed to provide annual forecasts following the massive earthquake on March 11.

The benchmark Nikkei average closed up 0.5 percent at 9,864.26, while the broader Topix gained 0.1 percent to 857.62. The Nikkei stayed above its 200-day moving average, now at 9,823, which has become an immediate support level.

Volume was moderate, with 2.1 billion shares changing hands on the Tokyo Stock Exchange's main board.