US stocks turn higher in late trading

US stocks have turned higher in late trading but the euro lost most of its gains after jittery investors in Europe took profits on the day's early gains on fresh concerns about the eurozone debt crisis.

Shrinking volume ahead of a religious holiday has dried up liquidity, contributing to the slide in prices.

Investor focus shifted to talks between the European Union, the IMF, ECB and Greece, just hours after a relief rally cheered the German passing of a stronger European bailout fund and better US economic data.

The troika inspectors are set to comb through new austerity plans for at least a week. Most analysts expect they will approve the next tranche of aid, although many expect Greece to have to default in the coming months.

"After gains driven by what was perceived as constructive news out of the eurozone, if we're concerned that the answer isn't right around the corner, you're going to see an unwinding of that trade," said Art Hogan, managing director of Lazard Capital Markets in New York.

"As much as we started the day on an upbeat tone because of some mildly positive economic data," he said, "we're now focusing on the fact that it's going to be a while before we have answers coming out of the eurozone in terms of their attempt to rescue Greece."

But the Dow turned positive by the session’s end, with the DJ industrial average closing up 1.2 per cent and the Standard & Poor's 500 Index up 0.66 per cent.

The Nasdaq Composite Index was down 0.57 per cent.

An index of global equities reversed course and was up 0.9 per cent, and U.S. dollar-denominated Nikkei futures gained 0.8 per cent.

In contrast, London’s FTSE 100 ended the day down 0.4 per cent despite a strong rally mid-afternoon after a sharp fall in US state benefit claim numbers and better-than-expected second-quarter GDP figures.

Copper prices added to their monthly rout, falling more than one per cent and more than 20 per cent so far in September.

The sharp decline underscores continued worries that the global economy could return to recession.