US STOCKS-Dow rises, helped by consumer shares

                                
 * McDonald's sales rebound in Europe; shares rise
                                
 * Outside commodities, China's impact on stocks limited
                                
 * Merger activity continues with healthcare deal
                                
 * Dow up 0.3 pct, S&P up 0.1 pct, Nasdaq up 0.1 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to afternoon trading, changes byline)
                                
 By Ryan Vlastelica
                                
 NEW YORK, Feb 8 (Reuters) - The Dow rose on Tuesday after
blue-chip component McDonald's posted stronger-than-expected
restaurant sales, but the S&P 500 and Nasdaq were little
changed after China raised interest rates.
                                
 The 25-basis-point increase was China's second increase in
six weeks and meant to combat inflation. The move pressured
energy shares on worry demand will be curbed. U.S. crude for
March delivery fell 0.2 percent to $87.33 a barrel while the
S&P energy sector <.GSPE> sank 0.9 percent.
                                
 But the market didn't react as negatively as it did to
previous Chinese rate hikes. Stocks resumed their upward move
that has taken the Dow and S&P to 2 1/2-year highs.
                                
 McDonald's Corp <MCD.N> surged 2.9 percent to $75.57 as its
January same-store sales beat expectations, helped by a rebound
in European demand. For details, see [ID:nN08242483T]
                                
 "The market realizes that while the rate hike is important,
corporate results like McDonald's are what's driving stock
prices higher," said Dan Veru, chief investment officer at
Fort Lee, New Jersey-based Palisade Capital Management LLC,
which oversees $3.5 billion. Veru said McDonald's was a core
holding of the fund.
                                
 The Dow Jones industrial average <.DJI> was up 39.47
points, or 0.32 percent, at 12,201.10. The Standard & Poor's
500 Index <.SPX> was up 1.74 points, or 0.13 percent, at
1,320.79. The Nasdaq Composite Index <.IXIC> was up 1.46
points, or 0.05 percent, at 2,785.45.
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 Analysis: Investors eye correction, rotation [ID:nnN08234126]
 Reuters Insider on energy's momentum [ID:nRTV188536]
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 The S&P consumer discretionary index <.GSPD> was up 0.7
percent and was by far the top performing among S&P 500
sectors.
                                
 Merger activity continued for a second day with Kindred
Healthcare Inc's <KND.N> planned acquisition of RehabCare Group
Inc <RHB.N> to create a post-acute healthcare services company.
[ID:nSGE71704O].
                                
 Kindred Healthcare jumped 20 percent to $23.44 and
RehabCare soared 43 percent to $36.34.
                                
 On the downside, Teva Pharmaceutical Industries' <TEVA.O>
U.S.-listed shares fell 6.3 percent to $51.54 after the world's
biggest maker of generic drugs reported results that fell short
of forecasts. [ID:nSGE71705C]
                                
 Avon Products Inc <AVP.N> posted a steeper-than-expected
drop in quarterly profit. Shares of the cosmetics company fell
5.2 percent to $27.82.
                                
 (Editing by Kenneth Barry)