CATCo Share News (CAT)

* China, US announce $50 bln tariffs on each others' imports

* Indexes: Dow down 0.13 pct, S&P up 0.13 pct, Nasdaq up0.36 pct

* S&P moves back above 200-day moving average

* Technology and automakers' stocks stage a comeback

* Industrials lag: Boeing down 4 pct; Caterpillar down 3 pct(Updates with early afternoon prices, new analyst comment)

By Sruthi Shankar

April 4 (Reuters) - U.S. stocks were marginally higher inafternoon trading on Wednesday, recovering from a steep drop atthe start of the session on fears of a deepening trade conflictbetween the United States and China.

Beijing hit back against U.S. plans to impose tariffs on $50billion in Chinese goods, retaliating with a list of similarduties on key American imports including soybeans, planes, cars,beef and chemicals. But technology products, from cellphones topersonal computers, were largely exempt.

There also may be room for negotiations as Washington has atwo-month window for public comment and consultation, and themarket also seemed to take comfort that the effective date ofChina's moves depends on when the U.S. action takes effect.

President Donald Trump rejected the notion that thetit-for-tat moves amounted to a trade war and his top economicadviser, Larry Kudlow, and U.S. Commerce Secretary Wilbur Rossboth held out the possibility of talks to resolve the matter.

Most traders said the initial slide – the Dow Industrialshad fallen as much as 2.12 percent, the S&P 1.56 percent and theNasdaq 1.86 percent – was an over-reaction.

"At the very beginning, the reaction was what we fear, 'It'sa tit-for-tat and does that escalate?'," said Art Hogan, chiefmarket strategist at B. Riley FBR in Boston.

"The market has stepped back. The good news is China didn'tescalate the retaliation. They came back dollar for dollar andthat's fair and balanced, that's a reciprocal response."

The S&P opened below its 200-day moving average, a keytechnical level, but inched above as the session progressed, andby afternoon was in positive territory, joined by the Nasdaq.

The Dow remained lower for the day, weighed down by Boeingand Caterpillar and other industrials, but waswell off its session low of a more-than-500 point drop.

At 12:35 p.m. ET, the Dow Jones Industrial Averagewas down 32.27 points, or 0.13 percent at 24,001.09.

The S&P was higher by 0.11 percent at 2,617.25 andthe Nasdaq Composite gained 0.36 percent at 6,966.04.

Boeing, the single largest U.S. exporter to China,was down 2 percent and Caterpillar was 1 percent lower,leading the 0.86 percent drop among industrials.

But technology companies erased their losses totrade flat, helped by Apple entering positiveterritory.

After steep drops right from premarket, Ford, GeneralMotors and Tesla reversed course to trade higherby 0.7 percent to 4.7 percent.

China's tariffs on U.S. soybean led to bets that higherdomestic reserves would lower food costs for meat producers suchas Tyson Foods, Hormel, Sanderson Farmsand Pilgrim's Pride, which gained 1-5 percent.

Lennar jumped 7.6 percent to lead the gainers on theS&P after the homebuilder reported quarterly revenue that beatestimates as it sold more homes at higher prices.

Declining issues outnumbered advancers for a 1.07-to-1 ratioon the NYSE and for a 1.51-to-1 ratio on the Nasdaq.(Reporting by Sruthi Shankar in Bengaluru; Editing by SavioD'Souza and Patrick Graham)