* U.S. weekly jobless claims rise unexpectedly
* U.S. existing home sales recover slightly in August
* Dow off 0.1 pct, S&P 500 dips 0.1 pct, Nasdaq up 0.5 pct (Updates to early afternoon)
By Edward Krudy
NEW YORK, Sept 23 (Reuters) - The S&P 500 held an important support level on Thursday after coming under pressure from more weak economic data in the United States and Europe, a sign the recent stocks breakout could hold.
Hard selling at the open pushed the broad-based index down almost 1 percent and below the key 1,130 mark -- a level that it blew past on Monday -- before it recovered to trade around the break-even point, helped by technology stocks.
"It is very significant, given the stress that we're starting to see unraveling," said David Lutz, managing director of trading at Stifel Nicolaus Capital Markets in Baltimore. "It feels very good to me at the moment."
Stocks have traded above major technical lines this week. But with persistently low trading volume at levels about 20 percent less compared with last year's average, some investors have been doubtful of the recent rally's sustainability.
Helping the technology sector, software maker Red Hat Inc jumped more than 12 percent after posting earnings that beat Wall Street's estimates, while Bed Bath & Beyond buoyed the Nasdaq, rising more than 4 percent, a day after its earnings also exceeded forecasts.
The Dow Jones industrial average slipped 12.56 points, or 0.12 percent, to 10,726.75. The Standard & Poor's 500 Index fell 1.24 points, or 0.11 percent, to 1,133.04.
But the Nasdaq Composite Index gained 12.50 points, or 0.54 percent, to 2,347.05.
The S&P 500 has rallied nearly 9 percent in the first three weeks of September as fears of a double-dip recession subside.
Weekly claims for jobless insurance jumped unexpectedly, highlighting continued weakness in the labor market, while existing home sales rose in August, but from July's severely depressed level, which was a 13-year low.
European stocks fell after data showed the pace of growth in the euro zone's services and manufacturing sectors slowed more than expected this month, rekindling worries about economic recovery in the region.
"It's a hodgepodge of data." said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati. "The bottom line is we're holding that breakout at the 1,130 level,
Big technology companies also helped the Nasdaq. Apple Inc rose 1.4 percent to $291.79, and provided the biggest boost to the index, while Intel Corp added 0.4 percent to $19.08. The S&P technology index rose 0.6 percent.
Amazon.com gave another major boost to the Nasdaq, rising 2.2 percent to $155.09 and helping push the Dow Jones U.S. retail index up 0.7 percent.
"Discount retailers are going to be acting well," Lutz said. "If our pockets are tight going into Christmas, those are the kind of places that we're probably going to be shopping."
Bionovo Inc shares soared 56.6 percent to $1.91 after the U.S. health regulators accepted the chemistry, manufacturing and controls plan for its lead drug candidate, Menerba, an experimental treatment for hot flashes related to menopause.
Red Hat Inc rose after it reported a second-quarter profit above Wall Street's forecasts as sales of its software rose sharply. The stock climbed 12.3 percent to $41.27.
Bed Bath & Beyond Inc also reported results that beat quarterly profit and sales estimates. It boosted its full-year forecast, driving the stock up 4.5 percent to $43.95. (Reporting by Edward Krudy; Additional reporting by Leah Schnurr; Editing by Jan Paschal)