Trader's Highlight

DJI-NEW YORK, July 6 (Reuters) - Transportation stocks were among the standouts in another flat session for U.S. equities on Wednesday, and the sector's rally could be cause for optimism ahead.

Broader gains were limited as a downgrade of Portugal's credit rating weighed on banking shares, while a rate hike in China loomed as another concern for investors. However, the Nasdaq rose for its seventh straight day, extending its rally to 6.8 percent.

The Dow Jones Transportation Average .DJT rose 1.2 percent and hit a new closing high at 5,566.07. The gains were led by Con-Way Inc CNW.N, which added 5.7 percent to $41.87 after the U.S. trucking company said it was restoring some employee benefits because the economy had improved.

The Dow Jones industrial average .DJI was up 56.15 points, or 0.45 percent, at 12,626.02. The Standard & Poor's 500 Index .SPX was up 1.34 points, or 0.10 percent, at 1,339.22. The Nasdaq Composite Index .IXIC was up 8.25 points, or 0.29 percent, at 2,834.02.

NYMEX-NEW YORK, July 6 (Reuters) - U.S. crude oil futures turned positive in post-settlement trading on Wednesday after data from the American Petroleum Institute showed domestic crude stocks fell last week by much more than expected.

The industry group said crude stocks dropped by 3.2 million barrels in the week to July 1, against forecasts for a 2.3-million-barrel drawdown in a Reuters poll of analysts.

On the New York Mercantile Exchange, crude for August delivery CLQ1 at 5:03 p.m. EDT (2103 GMT) was up 2 cents at $96.91 a barrel. It had settled at $96.65, off 24 cents or 0.25 percent, after trading between $95.90 and $97.79.

CBOT-SOYBEANS-Chicago Board of Trade soybean futures ended narrowly mixed as spillover pressure from corn and favorable U.S. crop weather offset support from technical buying and short-covering, traders said.

Additional pressure from news that China raised interest rates which lifted the dollar and pressured crude oil. Improving U.S. crop conditions and favorable weather lend pressure.

FCPO-JAKARTA, July 6 (Reuters) - Malaysian palm oil futures fell on Wednesday and hit a new eight-month low as investors factored in a higher output cycle and worries about weaker demand in the second half of the year.

The benchmark September crude palm oil contract KPOc3 on Bursa Malaysia Derivatives closed 0.4 percent lower at 3,029 ringgit ($1,006) a tonne. Earlier, prices touched a low at 3,016 ringgit -- a level not seen since Oct. 27, 2010.

Traded volume for the September contract was 13,473 lots of 25 tonnes each, versus 13,871 lots on Tuesday.

Malaysian palm oil stocks are likely to have risen 11.3 percent to near record levels in June as strong production and imports outpaced local and overseas demand, a Reuters poll showed on Tuesday. [nL3E7I40WH]

Palm oil prices fell almost 20 percent in the first half of this year, pressured by expectations for stocks to soar above 2 million tonnes at a time when output in Southeast Asia is growing and overseas demand is likely to slow.

Industry regulator Malaysian Palm Oil Board will issue official data on palm oil output, stocks, imports and exports on Monday.

REGIONAL EQUITIES-BANGKOK, July 6 (Reuters) - Most Southeast Asian bourses fell on Wednesday as renewed debt worries in the euro zone hurt sentiment, with the initial buying spree in Thai stocks after last weekend's election stalling as the market waited for the formation of a new government.

The sell-off came in light to moderate volume and was accompanied by modest capital inflows in some, including the Philippines and Vietnam.

Moody's downgrade of Portugal's credit rating ate into appetite for risky assets across Asia. After the close, China raised interest rates for the third time this year.[nB9E7EM01R] Speculation about a rise had hurt regional markets on Tuesday.

The Thai SET index .SETI dropped 1.1 percent to 1,072.68, with Singapore .FTSTI and others posting smaller losses.

Bucking the trend, Malaysia's benchmark .KLSE gained 0.6 percent to an all-time high of 1,591.34 amid buying in big caps, including palm plantation firm IOI Corp IOIB.KL, which climbed nearly 1 percent.