US STOCKS-Wall St flat as deal news offsets China rate hike

* China hikes interest rates but impact may be muted

* Nasdaq OMX rebalances Nasdaq 100, Apple shares fall

* Dow down 0.2 pct, S&P flat, Nasdaq up 0.1 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to open)

By Rodrigo Campos

NEW YORK, April 5 (Reuters) – U.S. stocks were little
changed on Tuesday as an interest rate hike in China and weaker
Apple shares were offset by positive sentiment from the latest
deal news.

Investors looked ahead to a Federal Reserve statement on
the outlook for the economy and interest rates later on
Tuesday.

Stocks showed a muted reaction to an industry report that
the vast U.S. services sector grew more slowly in March. For
details, see [ID:nN04250301

China’s central bank increased interest rates for the
fourth time since October, raising suspicions that data next
week may show inflation rose more than expected in March. For
details see [ID:nL3E7F51LX].

Apple Inc (AAPL.O: Quote, Profile, Research) had its weighting cut in a rebalancing
of shares in the Nasdaq 100, forcing some to sell the iPhone
maker’s stock. Once the rebalancing takes effect on May 2, the
projected weight of Apple will be 12.33 percent of the index
compared with the current 20.49 percent, Nasdaq OMX (NDAQ.O: Quote, Profile, Research)
said. Apple shares fell 0.9 percent to $338.04. For details see
[ID:nL3E7F510G].

Shares of Microsoft Corp (MSFT.O: Quote, Profile, Research), whose weighting will
rise, gained 1.6 percent to $25.95.

Texas Instruments (TXN.N: Quote, Profile, Research) is to pay a 78 percent premium
for rival National Semiconductor (NSM.N: Quote, Profile, Research) in a deal worth $6.5
billion. National Semi shares jumped 71.1 percent to $24.08.
[ID:nLDE7340KR]

“The market is getting used to the rate hikes in China and
there is less concern it will derail global growth,” said Jeff
Kleintop, chief market strategist at LPL Financial in Boston.

“On the plus side there’s this M&A deal in the tech space,”
he said. “Companies are beginning to spend their cash on merger
deals and also on hiring. They’re feeling confident enough to
spend on growth initiatives.”

The Dow Jones industrial average (.DJI: Quote, Profile, Research) dropped 25.84
points, or 0.21 percent, to 12,374.19. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) dropped 0.34 points, or 0.03 percent, to
1,332.53. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) gained 2.52
points, or 0.09 percent, to 2,791.71.

Investors will scour the minutes from the latest meeting of
the Fed’s policy-setting committee, expected at 2 p.m. (1800
GMT). Fed Chairman Ben Bernanke said a recent rise in U.S.
inflation was driven primarily by global commodity prices and
was unlikely to persist.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

US STOCKS-Wall St flat as deal news offsets China rate hike