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US techs rise with Microsoft; S&P 500 near unchanged

(Updates to early morning)

By Bill Rigby

NEW YORK, April 23 (Reuters) - U.S. technology stocks rose for the third straight session on Friday as investors welcomed revenue increases at Microsoft Corp. , which suggest the rebound in technology spending is persisting.

The broader Standard & Poor's 500 Index was close to unchanged even after strong earnings from industry leaders Xerox Corp. and International Paper Co. .

Corporate earnings have generally outperformed Wall Street's expectations as the busiest week in the quarterly reporting season winds up, but some investors continue to fret that higher interest rates ahead will put a dampener on profits.

"The Dow is in a tug of war between higher rates and a stronger economy," said Jay Suskind, head trader at Ryan Beck & Co. "But at the end of the day, would you rather have a stronger economy or a weaker economy if you are owning equities?".

Evidence of the economy's recovery was bolstered early Friday by Commerce Department data showing orders for long-lasting durable goods surged again in March, as U.S. factories sought to keep up with unexpectedly strong demand for a broad array of products.

The department said orders for big-ticket items meant to last at least three years jumped 3.4 percent, well above the 0.8 percent gain that Wall Street analysts had been expecting.

By early morning, the technology-focused Nasdaq Composite Index was up 16.76 points, or 0.82 percent, at 2,049.67. The Dow Jones industrial average was down 37.19 points, or 0.36 percent, at 10,424.23. The Standard & Poor's 500 Index was down 3.17 points, or 0.28 percent, at 1,136.74.

Microsoft was the most heavily traded stock on Nasdaq, up $1.64, or 6.3 percent, at $27.59. On Thursday, the world's largest software maker said quarterly profit fell after charges to settle legal disputes, but said revenue rose a better-than-expected 17 percent on stronger personal computer sales.

Early Friday, Xerox said it recorded a first-quarter net profit, against a year-ago loss, driven by strong sales of its new copiers and printers. But its shares edged down 61 cents to $13.80.

International Paper Co. , the world's largest forest products company, said its first-quarter earnings rose 66 percent on higher sales volumes in some paper and packaging grades. But its shares also fell 16 cents to $42.86.