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Wall Street rallies on China data

Tuesday, January 17, 2012

(Reuters) - U.S. stocks gained on Tuesday as brighter sentiment about China's growth prospects overshadowed Europe's recent credit downgrades and a mixed bag of big bank earnings.

China's economy expanded at the weakest pace in 2-1/2 years, data showed, suggesting officials may try to boost growth in the near term by tweaking monetary policy.

Bank earnings offered a mixed picture, with Wells Fargo & Co (WFC.N) posting a 20 percent jump in quarterly profit, while Citigroup Inc's (C.N) earnings were weaker than expected. Wells Fargo rose 1.3 percent to $29.99, while Citigroup lost 6.9 percent to $28.63.

The KBW Bank index .BKX, which had risen nearly 11 percent for the year, slipped 0.5 percent.

Investors looked beyond Standard & Poor's credit downgrade of the euro zone's rescue fund, relieved it was not more severe. The move came after Friday's widely expected downgrade of the credit ratings of nine euro-zone countries.

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