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US STOCKS-Wall Street dips as tech stocks lag; trade hopes cushion fall

By Uday Sampath Kumar

* China August factory deflation deepens

* Tech stocks weigh most among 11 major sectors

* Ford falls as Moody's downgrades bonds to junk

* Beijing to buy U.S. goods to sweeten trade deal -SCMP

* Indexes off: Dow 0.03%, S&P 0.22%, Nasdaq 0.27% (Updates to early afternoon)

By Uday Sampath Kumar

Sept 10 (Reuters) - A fall in technology stocks pulled Wall Street's main indexes lower on Tuesday as weak economic data from China revived global recession fears, but losses were tempered by hopes of a trade deal.

China's factory-gate prices shrank 0.8% in August, the sharpest pace of decline in three years, as businesses slashed prices to cope with flagging demand amid a bruising trade war with the United States that has slowed growth in the world's second largest economy.

"A slowdown in China is clearly a sign that global deceleration of economic activity is real and is something we're going to have to deal with," said Omar Aguilar, chief investment officer of equities and multi-asset strategies at Charles Schwab Investment Management.

Offering some respite, a report from the South China Morning Post said Beijing is expected to agree to buy more agricultural products in hopes of a better trade deal with the United States.

Analysts attributed some of the selloff in tech to investors re-distributing funds into stocks that have underperformed during the year.

Tech stocks, the best performer on the S&P 500 with a 29% surge this year, fell 0.84%, while the energy sector , the year's worst performer, jumped 1.59%.

Real estate fell 1.48%, the most among the 11 major S&P sectors. The sector is the second best performer of the year, gaining 25%.

"It's less about risk and more about returns - taking profits and reallocating to the losers," Aguilar said.

Trading so far this week has largely been subdued as investors are holding out for policy decisions from central banks on potential monetary easing. The European Central Bank will hold its policy meeting on Thursday.

The U.S. Federal Reserve and the ECB are widely expected to cut interest rates over the next two weeks, but investors doubt the extent to which central banks' measures will stem an economic slowdown.

At 13:05 p.m. ET the Dow Jones Industrial Average was down 7.18 points, or 0.03 percent, at 26,828.33, the S&P 500 was down 6.69 points, or 0.22 percent, at 2,971.74 and the Nasdaq Composite was down 21.87 points, or 0.27 percent, at 8,065.57.

Among other stocks, Boeing Co rose 1.92% even as it reported a 72% fall in plane deliveries in August.

Apple Inc kicked off its presentation where it is expected to announce pricing for its forthcoming streaming TV service as well as updates to its iPhone lineup. Shares of the company edged 0.06% higher.

Details on its new video streaming service could also move shares of Netflix Inc and Walt Disney Co. Netflix was down 0.92%.

Ford Motor Co fell 2.88% after ratings agency Moody's downgraded its bonds to junk status overnight.

Chipotle Mexican Grill Inc slipped 5.23% following Wendy's Co's announcement that it will expand its breakfast offerings as well as a lawsuit from New York Mayor Bill de Blasio's office accusing it of violating the city labor law.

Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and two new lows, while the Nasdaq recorded 33 new highs and 35 new lows. (Reporting by Uday Sampath in Bengaluru; Editing by Saumyadeb Chakrabarty and Arun Koyyur)