US STOCKS-Wall St extends rally as resource stocks outperform

                                
  
                                
 * Chinese manufacturing picks up, boosts commodities
                                
 * U.S. manufacturing growth slows in September
                                
 * Market regulators issue flash-crash report
                                
 * Dow up 0.4 pct, S&P up 0.4 pct, Nasdaq up 0.1 pct
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to close)
                                
 By Angela Moon
                                
 NEW YORK, Oct 1 (Reuters) - Wall Street extended the rally
on Friday, led by gains in resource stocks after data in China
showed a pick-up in manufacturing activity.
                                
 Gains were tempered by U.S. data suggesting the rate of
growth in U.S. factory activity slowed, but the upbeat trend in
the market prevailed.
                                
 Friday's gains occurred on less-than-stellar volume, but
two shares rose for every one that fell on the New York Stock
Exchange. Energy and resource shares were helped by data out of
China showing a pick-up in its manufacturing sector.
                                
 As copper hit a two-year high, gold jumped to another
record and oil climbed above $80 a barrel, shares of
Freeport-McMoRan Copper & Gold Inc <FCX.N> rose 4.4 percent to
$89.13 and Occidental Petroleum Corp <OXY.N> gained 3.2 percent
to $80.77.
                                
 "The market is going to be very news dependent going in
from now, especially after such a strong month. We have had
some good news today, especially from China, that prompted a
rally in Europe and was carried through the U.S.," said Stephen
Massocca, managing director at Webush Morgan in San Francisco.
                                
 The Dow Jones industrial average <.DJI> rise 41.63 points,
or 0.39 percent, to end at 10,829.68. The Standard & Poor's 500
Index <.SPX> advanced 5.04 points, or 0.44 percent, to
1,146.24. The Nasdaq Composite Index <.IXIC> edged up 2.13
points, or 0.09 percent, to close at 2,370.75.
                                
 But for the week, the Dow fell 0.3 percent, the S&P 500
slipped 0.2 percent and the Nasdaq dropped 0.4 percent.
                                
 The S&P 500 also hit a key resistance level after it
climbed as high as 1,150.30 before losing ground. That level is
viewed as the top of a recent range after stocks surged during
September.
                                
 The third quarter was the best in a year as investor
concern about a double-dip recession faded on improved data and
on expectations the Fed will inject more money into the
economy. The S&P 500 gained 10.7 percent in the
July-to-September period.
                                
 On a more cautious note, options traders also appeared to
be pricing in higher volatility for the near-term. The CBOE
Volatility Index <.VIX> or VIX, Wall Street's so-called fear
gauge, fell 5.1 percent to 22.50. But both the VIX and the CBOE
Nasdaq Volatility Index <.VXN> had closed higher for four
sessions out of five.
                                
 "Concerns about upcoming economic reports and the release
of third-quarter earnings appear to have traders worried," said
Scott Fullman, director of derivative investment strategy at
WJB Capital Group.
                                
 "New healthcare regulations go into effect and the upcoming
mid-term elections increase the probability for higher
volatility."
                                
 Technology shares ranked among the laggards as investors
locked in some profits the day after indexes wrapped up the
best quarter in a year. Amazon.com <AMZN.O> was among the
biggest drags on the Nasdaq, down 2.1 percent at $153.71.
                                
 In corporate news, shares of Hewlett-Packard <HPQ.N> fell
3.1 percent to $40.77 after the company named former SAP
<SAPG.DE> Chief Executive Leo Apotheker as its new CEO and
president. [ID:nN30231665]
                                
 Bank of America-Merrill Lynch on Friday downgraded
Caterpillar Inc <CAT.N>, a maker of heavy equipment, to
"neutral" from "buy," saying that after a recent run-up in the
shares, it saw limited upside. The Dow component was off 0.6
percent at $78.22.
                                
 Market regulators issued a report saying a massive sale of
futures contracts by Waddell & Reed exacerbated the market's
plunge on May 6, in what has become known as the "flash crash."
For details, see [ID:nN01141642]
                                
 A total of 7.73 billion shares traded on the New York Stock
Exchange, the Amex and the Nasdaq, compared with the previous
year's daily average of 9.65 billion shares.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
about 2 to 1. On the Nasdaq, about 15 stocks rose for every 11
that fell.
 (Reporting by Angela Moon; Additional reporting by Doris
Frankel; Editing by Jan Paschal)