NEW YORK — The stock market rose modestly today after Microsoft Corp. renewed talks with Yahoo Inc. but a new report showed the economy remains sluggish.

The Conference Board's leading economic indicators report showed a 0.1 percent rise for April, as expected. The index, aimed at predicting economic activity in the next three to six months, bolstered investors' belief that the overall U.S. economy, while weak, is not contracting rapidly.

Meanwhile, Microsoft Corp. has renewed talks with Yahoo Inc. about a possible deal to bolster the companies' position in the online search and advertising markets. The software maker did not say if the discussions included a takeover of Yahoo.

Yahoo said its directors "remain open to pursuing any transaction which is in the best interest of our stockholders."

In midmorning trading, the Dow Jones industrial average rose 21.00, or 0.16 percent, to 12,993.47.

Broader stock indicators were also higher. The Standard & Poor's 500 index rose 3.31, or 0.23 percent, to 1,428.66, and the Nasdaq composite index rose 8.08, or 0.32 percent, to 2,536.93.

Government bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its yield, slid to 3.84 percent from 3.85 percent late Friday.

The dollar rose against most other major currencies, while gold prices also climbed.

Inflation jitters continue to plague Wall Street. Energy traders shrugged off news that Saudi Arabia pledged to produce an additional 300,000 barrels of crude a day, and sent a barrel of light sweet crude up 35 cents to $126.64 on the New York Mercantile Exchange.

Regular gasoline prices topped $4 a gallon for the first time in two U.S. metropolitan areas.

In corporate news, Lowe's Cos. reported first-quarter profit fell from the year-ago period amid a slumping U.S. housing market. The second-largest home improvement chain guided earnings below Wall Street's estimate for the year because of a pullback in consumer spending. Lowe's fell 96 cents, or 3.9 percent, to $23.94.

General Motors Corp. rose after one of its biggest suppliers reached a tentative labor deal with the United Auto Workers. The agreement with American Axle & Manufacturing Holdings Inc. may end a nearly three-month strike by 3,650 U.S. hourly workers. GM rose 25 cents to $20.93.

The Russell 200 index of smaller companies rose 0.60, or 0.08 percent, to 741.77.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, where volume came to 153.8 million shares.

In overseas trade, Tokyo's Nikkei closed up 0.35 percent. In Europe, London's FTSE added 0.53 percent, Frankfurt's DAX rose 0.43 percent and Paris' CAC 40 was up 0.62 percent.