US STOCKS-Wall St sharply cuts gains as biotechs plunge

Reuters - UK Focus

* Biotech sector plunges in afternoon session

* Momentum stocks still in focus; Netflix (NasdaqGS: NFLX - news) falls

* Indexes turn lower for the week; Nasdaq down nearly 3 pct

* Dow up 0.2 pct; S&P 500 up 0.3 pct; Nasdaq flat (Updates to late afternoon)

By Angela Moon

NEW YORK (Frankfurt: HX6.F - news) , March 28 (Reuters) - U.S. stocks sharply paredgains by late Friday afternoon on Friday, with the Nasdaqbriefly turning negative, led by a decline in the biotechnologysector.

Major U.S. stock indexes had been significantly higher inmost of the morning and early afternoon trade following commentsfrom a Chinese official indicating that the country's governmentwas ready to take steps to support its slowing economy.

But a 2.6 percent drop in the Nasdaq biotechnology index led the major indexes to session lows. The biotech sectoris down nearly 7 percent for the week and down about 13 percent for the month.

Gilead Science shares were off 3.3 percent at$69.03 and Biogen Idec (NasdaqGS: BIIB - news) shares were down 4.1 percent at$297. The two stocks were the S&P 500's biggest decliners.

"Almost everyday this week, we've been seeing a pattern ofthe market opening higher and then selling off towards theclose. Some are saying that it's the smart money is selling offat the end of the day. If we see that pattern again today, thatwould be concerning," said Randy Frederick, managing director oftrading and derivatives at the Schwab Center for FinancialResearch in Austin, Texas.

The Dow Jones industrial average rose 26.05 points or0.16 percent, to 16,290.28. The S&P 500 gained 5.46points or 0.3 percent, to 1,854.50. The Nasdaq Composite dropped 0.063 of a point to 4,151.17.

For the week, the Dow was down 0.1 percent, while the S&P500 was off 0.6 percent and the Nasdaq was down 2.9 percent.

The week's losses were concentrated in the Nasdaq asinvestors took profit in some of the market's biggestoutperformers, mostly in the Internet and biotech space. Someanalysts say the selloff in "momentum" stocks has yet to run itscourse, though this could benefit more value-orientated names. Amove to such companies helped limit the Dow's weekly decline.

One of the more prominent momentum names, Netflix Inc, continued its downward trend, slipping 1.6 percent to$358.50. If the online movie rental company's stock closes loweron Friday, it will have dropped for 16 of the last 18 sessions,losing about a fifth of its value over that period.

In the latest economic data, personal income and consumptionboth rose 0.3 percent in February, the latest indication thatweak data earlier this year was due to bad weather rather thanworsening fundamentals.

Red Hat Inc (NYSE: RHT - news) reported fourth-quarter earnings thatbeat expectations late Thursday, though the company gave afull-year profit view that was below forecasts. Red Hat's stockfell 7.2 percent to $52.07.

U.S. consumer sentiment fell in March as consumers were lesshopeful about the prospects for the overall economy, accordingto the Thomson Reuters (Frankfurt: TOC.F - news) /University of Michigan's final Marchreading on the overall index on consumer sentiment. While thereport was up by 0.1 from the preliminary March read, it wasalso slightly under expectations.

China's Premier Li Keqiang said the government had thenecessary accommodative policies in place and would push aheadwith infrastructure investment.

(Editing by Jan Paschal)

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