May 30, 2018 / 2:18 PM / 5 months ago

US STOCKS-Wall St bounces back after selloff driven by Italy turmoil

* Italy renews attempt to form a government

* HP Inc, Salesforce.com gain on strong results

* Energy, bank stocks lead S&P gainers

* Indexes up: Dow 0.47 pct, S&P 0.55 pct, Nasdaq 0.47 pct (Updates to open)

By Medha Singh

May 8 (Reuters) - Wall Street rose on Wednesday, with gains in energy and banking stocks fueling the recovery from a steep selloff driven by Italy’s political crisis.

A renewed attempt to form a coalition government in Rome by the two anti-establishment parties, the 5-Star Movement and League, raised hopes that Europe’s third largest economy could avoid a new election.

A surprise breakthrough to form a hung government would ease uncertainty, but still usher in a coalition planning to ramp up spending in the heavily indebted nation and push for changes to European Union and euro-zone fiscal rules.

“It’s a rebound from yesterday on hopes that there may be some agreement on forming a government. But these kind of perceptions are going to bounce back and forth,” said Scott Brown, chief economist at Raymond James in St. Petersburg.

“Markets are a little bit fragile because it’s a holiday week. That could lead to some sharp moves either way.”

At 10:04 a.m. EDT the Dow Jones Industrial Average was up 115.15 points, or 0.47 percent, at 24,476.60, the S&P 500 was up 14.72 points, or 0.55 percent, at 2,704.58 and the Nasdaq Composite was up 34.00 points, or 0.46 percent, at 7,430.60.

The S&P 500 and the Dow on Tuesday posted their first 1 percent drop in May as investors scurried for safety assets such as U.S. bonds on fears of political instability in Italy.

On Wednesday, 10 of the 11 major S&P sectors rose, led by a 1.5 percent gain in energy index.

Bank stocks, which were the worst hit on Tuesday, recovered with the S&P financial index rising 1.1 percent. The Federal Reserve is set to consider a proposal to modify the “Volcker Rule” at 3:00 p.m. ET.

The proposal, which marks another step by Trump administration regulators to ease banking rules, is aimed at preventing lenders from making market bets while accepting taxpayer-insured deposits.

The S&P technology gained 0.4 percent, boosted by a 2.1 percent jump in shares of cloud-based business software maker Salesforce.com that reported quarterly profit above estimates and lifted full-year forecast.

HP Inc rose 2.6 percent after posting quarterly revenue above estimates and raising full-year profit forecasts.

Investors also kept a wary eye on the developments around tariffs and trade. In an unexpected change in tone, the United States said late on Tuesday it could still impose tariffs on $50 billion of imports from China unless it addressed the issue of theft of American intellectual property.

China said on Wednesday it was ready to fight back if Washington was looking for a trade war, days ahead of a planned visit by U.S. Commerce Secretary Wilbur Ross.

Advancing issues outnumbered decliners for a 4.32-to-1 ratio on the NYSE and for a 3.64-to-1 ratio on the Nasdaq.

The S&P index recorded 15 new 52-week highs and one new low, while the Nasdaq recorded 124 new highs and 10 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur)

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