U.S. stocks slipped Thursday in the latest leg of a global equities sell-off as investors' diminishing appetite for risk drove them to safer assets like bonds, but data showing unexpected strength in U.S. manufacturing helped indexes end off their worst levels.

The Dow Jones industrial average fell 34.29 points, or 0.28 percent, to end at 12,234.34. The Standard & Poor's 500 Index slipped 3.65 points, or 0.26 percent, to 1,403.17. The Nasdaq Composite Index dropped 11.94 points, or 0.49 percent, to 2,404.21.

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Industrial conglomerates and large manufacturers, such as United Technologies Corp. (UTX) and Caterpillar Inc. (CAT), were among the Dow's biggest decliners. Investors are worried about the exposure of some big manufacturers to China, where a 9 percent drop in the benchmark Shanghai stock index on Tuesday helped set off a global sell-off in stocks.

Trading during the session was choppy, causing the Dow to slip in and out of positive territory. The swing in the Dow was about 230 points from its session low to its high for the day.

Risk-taking fell out of favor as the yen's climb raised concern that investors were being forced to unwind trades based on borrowing at Japan's low interest rates.

Investors also gravitated to sectors, including utilities, that they believe are better positioned to withstand moderation of economic growth.

"People are going to run where it's safe," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "The sell-off this morning was pretty vicious, so it's encouraging to see that things came back."

After the bell, Dell Inc. (DELL), the world's second-largest personal computer maker, reported a quarterly profit that topped estimates, but revenue was short of expectations, pushing the stock down 1.6 percent to $22.65.

In regular trading, a handful of disappointing earnings outlooks also contributed to the sour mood. Ciena Corp. (CIEN), a communications equipment maker, and Constellation Brands Inc., a beverage company, both fell after giving weak forecasts.

Ciena shares dropped 10.1 percent, to 3.2 percent, to $28.28 on the Nasdaq, while Constellation shares fell 14.5 percent, or $3.40, to $20.06 on the New York Stock Exchange.

Reflecting investors' flight to quality and the relative safety of government bonds, the benchmark 10-year U.S. Treasury note was up 6/32 in price at 100-18/32, while its yield slipped to 4.55 percent from 4.57 percent late on Wednesday.

In the first hour of trading, the Dow industrials slid 209 points. But data showing unexpected strength in an index of U.S. manufacturing inspired some buying and helped the major stock indexes rebound from their early session lows.

"People came in and bought the market. It's a very good day for the market, considering that we were down 200 points right after the open," said Todd Leone, head of listed trading, Cowen & Co. in New York.

Even so, shares of United Technologies dropped 0.8 percent, or 51 cents, to $65.12 on the NYSE, while shares of Caterpillar fell 0.8 percent, or 52 cents, to $63.90, both on the NYSE.

But Citigroup Inc. (C) supported both the Dow and the S&P 500 as the stock, among those most severely punished in Tuesday's plunge, suddenly looked attractive to investors seeking to increase their exposure to dividend-paying stocks.

Citigroup, the largest U.S. banking company, offers a dividend yield of 4.29 percent, which could lure some buyers away from U.S. Treasury bonds. The stock finished up 1.4 percent, or 68 cents, at $51.08 on the NYSE.

Shares of Apple Inc. (APPL), the maker of Macintosh computers and iPod digital music players, climbed 2.9 percent and led the Nasdaq 100 higher after Lehman Brothers raised its rating on the stock to "overweight," according to a report by MarketWatch. Apple rose $2.45 to $87.06.

Boeing Co. (BA) was another exception, ending up gaining 0.7 percent, or 58 cents, at $87.85 after European rival Airbus announced 10,000 job cuts.

Shares of Edison International gained 1.41 percent, or 66 cents, to $47.58, a day after the utility company posted a stronger-than-expected profit. The S&P utilities index

ended up 0.3 percent, making the sector the only S&P 500 sector out of 10 to end in the plus column.

Volume was heavy on the NYSE, where about 2.22 billion shares changed hands, below last year's estimated daily average volume of 1.84 billion. On the Nasdaq, about 2.76 billion shares were traded, above last year's daily average of 2.02 billion.

Decliners outnumbered advancers by a ratio of about 8 to 5 and on the Nasdaq, about 2 to 1.

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