* Oil prices pare losses on chance of OPEC output cap
* Global factory data muted; U.S. tops expectations
* Michael Kors jumps on strong sales growth
* Dow down 0.15 pct, S&P down 0.1 pct, Nasdaq up 0.01 pct (Updates to early afternoon)
By Tanya Agrawal
June 1 (Reuters) - U.S. stocks were little changed on Wednesday afternoon, recovering from steep losses earlier in the session, helped by encouraging factory data and a pull back in oil prices.
Wall Street fell earlier after surveys showed global manufacturing activity remained stuck in a rut last month, with factory output from Asia and Europe barely improving as producers struggled to bring in new orders.
But, U.S. manufacturers fared better than their overseas counterparts in May, reporting slightly higher growth than economists expected, according to the Institute for Supply Management.
That helped ease fears of a slowdown in global growth and, along with a oil prices paring some losses on the likelihood of OPEC considering a new output ceiling, gave investor sentiment a boost.
Investors have been mulling over the possibility of a interest rate hike in June. But, traders are now pricing in about a 23 percent chance of a hike this month, down from a probability of around 32 percent on Monday, according to the CME Group FedWatch tool.
"We had some overnight data points out of China that gave investors some pause this morning," said Bill Northey, chief investment officer at U.S. Bank Private Client Group in Montana.
"I think there are some concerns regarding global growth and enough headwinds remain for some profit taking."
At 12:38 p.m. ET (1638 GMT) the Dow Jones industrial average was down 27.56 points, or 0.15 percent, at 17,759.64.
The S&P 500 was down 2.09 points, or 0.1 percent, at 2,094.87.
The Nasdaq Composite was up 0.39 points, or 0.01 percent, at 4,948.44.
Seven of the 10 major S&P sectors were lower, with the telecommunications index's 1.16 percent fall leading the decliners.
Financials, which were down nearly 1 percent earlier, reversed course to eke out a 0.02 percent gain.
Handbag maker Michael Kors rose 6.4 percent to $45.44 after posting its strongest sales growth in a year and announcing a new share buyback.
Demandware soared 55.7 percent to $74.73 after Salesforce.com agreed to buy the company in a $2.8 billion deal. Salesforce was down 0.1 percent at $83.60.
Advancing issues outnumbered decliners on the NYSE by 1,596 to 1,330. On the Nasdaq, 1,503 issues rose and 1,209 fell.
The S&P 500 index showed 12 new 52-week high and one new low, while the Nasdaq recorded 36 new highs and 16 new lows. (Reporting by Tanya Agrawal; Editing by Savio D'Souza)