NEW YORK: US equities started Tuesday with a modest rebound after sinking in the previous session, amid retreating concerns about widespread damage from the looming collapse of China's debt-burdened property developer Evergrande.

Major indices had lost as much as three percent on Monday but managed to recover some ground late in the session.

About 30 minutes into trading, the benchmark Dow Jones Industrial Average was up 0.7 percent at 34,216.13.

The broad-based S&P 500 rose 0.5 percent to 4,378.79, and the tech-rich Nasdaq Composite Index also added 0.5 percent to 14,789.6.

Markets were calmed by analysts' belief that Evergrande would not spark a widespread crisis such as the collapse of US banking giant Lehman Brothers did in 2008.

Wall St drops 2% on growth worries; focus turns to Fed

"The early contention is that yesterday's reported angst that a debt default by China's Evergrande could trigger systemic risk has been tempered," Briefing.com analyst Patrick J. O'Hare said.

"Hence, there is a bit of a relief bid coming back into play as participants scrap concerns about a worst-case scenario unfolding."

Markets also are watching the two-day Federal Reserve policy meeting which opens Tuesday and could bring details on when the central bank will begin to slow its stimulus measures.

Meanwhile, Democrats in Congress have unveiled a plan to suspend the government borrowing cap through 2022, which would remove the threat of a default and also fund operations through the end of the year while they debate a broader spending package.

But the measure is in doubt since the Republican opposition has vowed not to support a debt limit increase.

A 3.9 percent jump in housing start is positive for home sales, although the increase was solely due to construction of apartments, according to government data.

In individual shares, Uber gained 7.4 percent after reporting solid earnings.