US STOCKS-Wall Street higher on trade optimism, rate cut hopes

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* Dow set for seventh straight days of gains
* China stimulus, Mexico tariff relief helps mood
* United Technologies, Raytheon weigh on industrials
* Symantec falls on Morgan Stanley downgrade
* Indexes up: Dow 0.29%, S&P 0.30%, Nasdaq 0.37%

(Updates prices, changes comment)
By Aparajita Saxena and Shreyashi Sanyal
June 11 (Reuters) - Wall Street's main indexes rose and the
S&P 500 edged back toward record territory on Tuesday, as easing
trade tensions with Mexico and hopes of an interest rate cut by
the Federal Reserve lifted investor sentiment.
Optimism over President Donald Trump's decision late on
Friday to hold off import tariffs on Mexico has helped markets
this week, even though the United States warned it would impose
tariffs if its demands were not satisfied. The benchmark S&P 500 index .SPX is now just about 2% away
from its early May record high and the Dow Jones Industrial
Average .DJI is set to rise for the seventh straight day, its
longest winning streak in 13 months.
Market is betting on an interest rate cut in July and two
more this year as Trump's hard bargaining on trade with Beijing
and others could push the economy back into recession. MMT/
Meanwhile, U.S. producer prices increased solidly for a
second straight month in May, in line with expectations of
economists polled by Reuters, pointing to a steady pickup in
underlying inflation pressures. "Investors are looking at moderating economic data. It is
really what I believe is the disappointing read on inflation,
which is increasing the odds of a rate cut," said Mike
Loewengart, vice president, investment strategy at E*Trade
Financial Corp in New York.
Meanwhile, Trump's comment on Monday that he would impose
more tariffs on Chinese imports if there was no progress in
talks with Chinese President Xi Jinping at the G20 summit
continues to remain a overhang on markets.
"The unresolved trade dispute with China is still a ceiling
on the stock market. Don't expect the S&P 500 to get back to the
record high of 2,945 until the trade agreement is signed or
close to being signed," said Greg McBride, senior vice president
and chief financial analyst at Bankrate in Palm Beach, Florida.
At 11:23 a.m. EDT the Dow Jones Industrial Average .DJI
was up 76.12 points, or 0.29%, at 26,138.80, the S&P 500 .SPX
was up 8.71 points, or 0.30%, at 2,895.44 and the Nasdaq
Composite .IXIC was up 28.73 points, or 0.37%, at 7,851.90.
Markets gained as shares of large-cap companies - Facebook
Inc FB.O , Apple Inc AAPL.O , Amazon.com Inc AMZN.O , and
Alphabet Inc GOOGL.O - climbed between 0.6% and 2%.
But a drop in shares of United Technologies Corp UTX.N and
Raytheon Co RTN.N kept capped the gains.
United Technologies fell 3.1% and Raytheon dropped 3.7%, a
day after Trump gave mixed signals on whether he believed the
$121 billion merger between the companies should go forward.
The industrials .SPLRCI fell 0.51%, the most among the
three sectors trading lower, including the defensive utilities
.SPLRCU and real estate .SPLRCR .
Symantec Corp SYMC.O fell 3.1%, after Morgan Stanley
downgraded the antivirus software maker's stock, citing
increased competition.
Amid an escalating trade war, Beijing said it would allow
local governments to use proceeds from special bonds as capital
for major investment projects to support the slowing economy.
Advancing issues outnumbered decliners by a 1.54-to-1 ratio
on the NYSE and a 1.15-to-1 ratio on the Nasdaq.
The S&P index recorded 47 new 52-week highs and one new low,
while the Nasdaq recorded 48 new highs and 50 new lows.