US STOCKS-Cat lifts Dow as Wall St marks 3 weeks of gains

                                

                                
 * Caterpillar shares up as dealer sales accelerate
                                
 * China raises reserve requirements for banks
                                
 * Dow up 0.38 pct, S&P flat, Nasdaq off 0.13 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates prices, changes byline)
                                
 By Rodrigo Campos
                                
 NEW YORK, Feb 18 (Reuters) - U.S. stocks were little
changed on Friday, with major indexes on course for a third
week of gains as money managers saw little on the horizon to
tame the bullish trend.
                                
 Caterpillar Inc <CAT.N> helped lift the Dow industrials,
rising 1.5 percent to $104.96 after the equipment maker said
machinery sales through dealers accelerated in the three months
through January.
                                
 The S&P 500 is up 28 percent since the start of September,
and this week doubled its level from the March 2009 lows, the
quickest 100 percent jump since the Great Depression. For an
analysis of the bull market, see [ID:nN16292615]
                                
 Investors have been braced for a pullback, with technical
measures pointing to signs of overbought conditions, but the
market has for weeks defied those expectations.
                                
 More investors want in on the gains and are looking for any
signs of price weakness to jump in, analysts said.
                                
 "It certainly suggests a lot of buyers missed the rally
over last two years ...(and) that the market has a lot of
underlying support," said Charles Lieberman, chief investment
officer of Advisers Capital Management in Hasbrouck Heights,
New Jersey.
                                
 Paul Mendelsohn, chief investment strategist at Windham
Financial Services, said, "Everything indicates we should be
near a top, yet we just keep climbing higher."
                                
 Strong fourth-quarter earnings and data showing improvement
in the U.S. economy have also helped propel stocks higher.
                                
 The Dow Jones industrial average <.DJI> gained 46.59
points, or 0.38 percent, to 12,364.73. The Standard & Poor's
500 Index <.SPX> dipped 0.30 points, or 0.02 percent, to
1,340.13. The Nasdaq Composite Index <.IXIC> fell 3.62 points,
or 0.13 percent, to 2,827.96.
                                
 Volume has been light in the most recent leg of the rally,
with just 6.7 billion shares changing hands on Thursday on the
New York Stock Exchange, NYSE Amex and Nasdaq combined -- the
second lowest total so far this year.
                                
 Trading was also lackluster ahead of the long holiday
weekend. The markets will be closed for the U.S. Presidents Day
holiday on Monday.
                                
 Overall, investors are coming to the realization that
staying in bonds or cash is going to cost them, Lieberman said.
"In both cases, they're being hurt," he said.
                                
 Among earnings reports, Brocade Communications Systems Inc
<BRCD.O> topped estimates and forecast second-quarter profit
above Wall Street's expectations, pushing its shares up 9.1
percent to $6.56.
                                
 Overseas, China raised banks' required reserves by 50 basis
points on Friday, showing no let-up in the government's
campaign to stamp out stubbornly high inflation.
 (Additional reporting by Caroline Valetkevitch and Edward
Krudy; Editing by Padraic Cassidy)