* China, US announce $50 bln tariffs on each others' imports
* Indexes: Dow down 0.13 pct, S&P up 0.13 pct, Nasdaq up 0.36 pct
* S&P moves back above 200-day moving average
* Technology and automakers' stocks stage a comeback
* Industrials lag: Boeing down 4 pct; Caterpillar down 3 pct (Updates with early afternoon prices, new analyst comment)
By Sruthi Shankar
April 4 (Reuters) - U.S. stocks were marginally higher in afternoon trading on Wednesday, recovering from a steep drop at the start of the session on fears of a deepening trade conflict between the United States and China.
Beijing hit back against U.S. plans to impose tariffs on $50 billion in Chinese goods, retaliating with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals. But technology products, from cellphones to personal computers, were largely exempt.
There also may be room for negotiations as Washington has a two-month window for public comment and consultation, and the market also seemed to take comfort that the effective date of China's moves depends on when the U.S. action takes effect.
President Donald Trump rejected the notion that the tit-for-tat moves amounted to a trade war and his top economic adviser, Larry Kudlow, and U.S. Commerce Secretary Wilbur Ross both held out the possibility of talks to resolve the matter.
Most traders said the initial slide – the Dow Industrials had fallen as much as 2.12 percent, the S&P 1.56 percent and the Nasdaq 1.86 percent – was an over-reaction.
"At the very beginning, the reaction was what we fear, 'It's a tit-for-tat and does that escalate?'," said Art Hogan, chief market strategist at B. Riley FBR in Boston.
"The market has stepped back. The good news is China didn't escalate the retaliation. They came back dollar for dollar and that's fair and balanced, that's a reciprocal response."
The S&P opened below its 200-day moving average, a key technical level, but inched above as the session progressed, and by afternoon was in positive territory, joined by the Nasdaq.
The Dow remained lower for the day, weighed down by Boeing and Caterpillar and other industrials, but was well off its session low of a more-than-500 point drop.
At 12:35 p.m. ET, the Dow Jones Industrial Average was down 32.27 points, or 0.13 percent at 24,001.09.
The S&P was higher by 0.11 percent at 2,617.25 and the Nasdaq Composite gained 0.36 percent at 6,966.04.
Boeing, the single largest U.S. exporter to China, was down 2 percent and Caterpillar was 1 percent lower, leading the 0.86 percent drop among industrials.
But technology companies erased their losses to trade flat, helped by Apple entering positive territory.
After steep drops right from premarket, Ford, General Motors and Tesla reversed course to trade higher by 0.7 percent to 4.7 percent.
China's tariffs on U.S. soybean led to bets that higher domestic reserves would lower food costs for meat producers such as Tyson Foods, Hormel, Sanderson Farms and Pilgrim's Pride, which gained 1-5 percent.
Lennar jumped 7.6 percent to lead the gainers on the S&P after the homebuilder reported quarterly revenue that beat estimates as it sold more homes at higher prices.
Declining issues outnumbered advancers for a 1.07-to-1 ratio on the NYSE and for a 1.51-to-1 ratio on the Nasdaq. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza and Patrick Graham)