US open: Services PMI's lift Wall Street out of the red

Wall Street has erased early losses, helped by upbeat readings on the country's services sector albeit amid lingering concerns about the potential for increased trade frictions between the US and some of its main trading partners.

At 1657 GMT, the Dow Jones Industrial Average was up by 0.30% or 74.55 points at 24,612.59, alongside a rise of 0.38% or 10.30 points for the S&P 500 to 2,701.91, while the Nasdaq Composite was adding 0.29% or 21.18 points to 7,280.18.

From a sector standpoint, the biggest gains were being seen in Medical supplies (2.64%), Water (2.19%) and Full line insurance (2.05%).

Last Friday, stocks had ended the session mixed, amid news that Trump will impose a 25% tariff on steel imports and a 10% tariff on aluminium.

Helping to steady sentiment, the ISM's closely-followed services sector purchasing managers' index slipped from a reading of 59.9 for January to 59.5 in February (consensus: 59.0).

As expected, the separate services sector PMI compiled by IHS Markit rose to 55.9 in February from 53.3 for the month before.

On the trade front, on Saturday Trump tweeted: "If the EU wants to further increase their already massive tariffs and barriers on US companies doing business there, we will simply apply a tax on their cars which freely pour into the US. They make it impossible for our cars (and more) to sell there. Big trade imbalance!"

The US president followed up at the beginning of the week, tweeting that tariffs against Canada and Mexico would only be cancelled if a "new and fair" North American Free Trade deal was signed.

Craig Erlam, senior market analyst at Oanda, said: "With the US President threatening tariffs on car imports should the EU retaliate, there is a real possibility that a trade war could unfold which doesn't work to anyone's benefit. The prospect of this rattled markets on Friday but this didn’t last long and US equities quickly bounced back, with the S&P 500 ending the day half a percentage point higher. European stocks have been playing catch up at the start of the week, although automakers continue to struggle after Trump's threats."

Market participants were also keeping an eye on Italy, which looked set for a hung parliament after voters backed right-wing and populist parties.

In corporate news, shares in Sparton Corp were getting pummeled after its takeover by London-listed Ultra Electronics was blocked on antitrust grounds, sending the stock to the steepest fall on the NYSE.

It was a much cheerier picture for Bermuda-based insurer XL Group, however, with shares up a whopping 29% and at the top of the NYSE's most active list after it agreed to be bought by French insurer AXA for $15.3bn.

Clearside Biomedical rocketed trade after announcing positive top-line results in a late-stage trial of a macular edema treatment.