US STOCKS-Data weighs on market, but tech cushions Nasdaq

* U.S. weekly jobless claims rise unexpectedly

* S&P breaks through key support level

* Red Hat, Bed Bath & Beyond rise after results

* Indexes down: Dow 0.6 pct, S&P 0.7 pct, Nasdaq 0.3 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to afternoon trading, changes byline)

By Ryan Vlastelica

NEW YORK, Sept 23 (Reuters) - U.S. stocks fell on Thursday after a round of weak economic data from the United States and Europe underlined the weaknesses that face the recovery, though gains in tech stocks helped limit losses on the Nasdaq.

The S&P 500 broke below the key 1,130 level, the high end of a long-lasting trading range. Investors had hoped that remaining above that level would be a sign that gains would stick. However, low trading volume has prompted some to doubt the strength of a recent rally.

Jobless claims unexpectedly rose in the latest week, breaking two straight weeks of declines and underlining the headwinds that still face the labor market. For details, see [ID:nN23130114]

"I don't see enough economic growth to spur employers to hire people, and until that happens, we won't have consumer confidence or spending," said Len Blum, managing partner at Westwood Capital LLC in New York. "That points to a very slow recovery."

Adding to concerns, European data showed the pace of growth in the euro zone's services and manufacturing sector slowing more than expected. U.S. data also showed existing-home sales rose in August, but from July's severely depressed level, which was a 13-year low. [ID:nN23142491]

"Weakness in housing and the labor market continue to create overhead for stocks and suggests that the size of the rally we've seen this month was probably unwarranted," Blum said.

The Dow Jones industrial average <.DJI> was down 62.44 points, or 0.58 percent, at 10,676.87. The Standard & Poor's 500 Index <.SPX> was down 7.88 points, or 0.69 percent, at 1,126.40. The Nasdaq Composite Index <.IXIC> was down 8.05 points, or 0.34 percent, at 2,326.50.

Software maker Red Hat Inc jumped 10 percent to $40.54 after posting earnings that beat Wall Street's estimates, while Bed Bath & Beyond rose 2.9 percent to $43.28 a day after its earnings also topped forecasts. [ID:nN22266298] [ID:nN22267954]

Big technology companies also helped the Nasdaq. NVIDIA Corp gained 2.4 percent to $11.67 while U.S.-listed shares of Baidu Inc rose 2.1 percent to $93.77.

McDonald's Corp edged 0.1 percent lower to $75.03 after it raised its quarterly cash dividend by 11 percent to 61 cents. The move comes a day after fellow Dow component, Microsoft Corp , raised its dividend but fell because investors had been looking for a higher yield. [ID:nSGE68M0GE]

Bionovo Inc soared 64 percent to $1.99 after U.S. health regulators accepted the chemistry, manufacturing and controls plan for its leading drug candidate, Menerba, an experimental treatment for hot flashes related to menopause. [ID:nSGE68M0IA]

Bespoke Investment Group wrote that the top-performing stocks of the quarter should continue to outperform in the final week because of window dressing.

The theory is that "fund managers want to have these names on their books for clients to see," the firm wrote to clients. (Editing by Kenneth Barry)