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* U.S. consumer spending for Sept. rises in line with expectations
* Italy dodging a ratings downgrade offers support
* IBM drops on $34 bln deal for Red Hat, which jumps
* GM, Ford up on report China mulls cutting car purchase tax
* Indexes: Dow up 1.38 pct, S&P 1.6 pct, Nasdaq 1.71 pct (Updates to open)
By Shreyashi Sanyal
Oct 29 (Reuters) - U.S. stock indexes rose on Monday, as gains in auto stocks, a recovery in tech company stocks and relief over an unchanged sovereign rating on Italy helped a rebound from last week's steep global selloff.
Carmaker Ford Motor Co rose 6.2 percent, while General Motors Co gained 4.5 percent after Bloomberg reported China was planning to cut the tax levied on car purchases by half.
All of the 11 major S&P sectors were in positive territory with technology up 1.9 percent, gaining the most, followed by the communication services sector, which rose about 2 percent.
The two sectors house four of the five high-growth FAANG stocks. Facebook Inc, Apple Inc, Netflix Inc and Alphabet GOOGL.O were up between 1.2 percent and 2.2 percent. Amazon.com Inc, part of consumer discretionary and another stock hit heavily by unusually shaky tech results last week, was trading flat.
Wall Street has been rocked by jitters over geopolitical events as well as fears over tariffs, rising wages and borrowing costs, putting the benchmark S&P 500 on track for its worst monthly performance since May 2010.
"Investors are coming in today from an oversold market last week," said Art Hogan, chief market strategist at B. Riley FBR in New York. "Markets are set to have a positive reaction to any form of good news."
Relief over Italy dodging a ratings downgrade helped global sentiment and overturned an earlier fall in U.S. stock futures due to data showing China's industrial profit growth slowed for a fifth straight month in September.
The slowdown in China, a major source of income for several American companies, has been a concern this earnings season, with a slew of corporates from industrials to chipmakers giving discouraging forecasts.
While healthy third-quarter results have pushed up third-quarter profit estimates at S&P companies to 25.2 percent from 21.8 percent in the past 10 days, dour forecast have pulled down the current-quarter's growth outlook to 19.5 percent from 19.9 percent, according to Refinitiv data.
At 10:08 a.m. ET the Dow Jones Industrial Average was up 340.01 points, or 1.38 percent, at 25,028.32, the S&P 500 was up 1.6 percent at and the Nasdaq Composite was up 122.49 points, or 1.71 percent, at 7,289.71.
Also offering support was data that showed U.S. consumer spending for September rising in line with expectations and income recording its smallest gain in more than a year, suggesting a moderation in spending in the future.
Shares of IBM Corp fell nearly 2 percent after the company agreed to buy software company Red Hat Inc for $34 billion. Red Hat shares soared 47 percent.
Tesla Inc rose 2.5 percent as the Times reported that the electric carmaker's third largest shareholder, Baillie Gifford & Co, would be willing to inject more cash in the company. (Reporting by Shreyashi Sanyal in Bengaluru)