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US STOCKS-Wall St sharply cuts gains as biotechs plunge

* Biotech sector plunges in afternoon session

* Momentum stocks still in focus; Netflix falls

* Indexes turn lower for the week; Nasdaq down nearly 3 pct

* Dow up 0.2 pct; S&P 500 up 0.3 pct; Nasdaq flat

(Updates to late afternoon)

NEW YORK, March 28 (Reuters) - U.S. stocks sharply pared gains by late Friday afternoon on Friday, with the Nasdaq briefly turning negative, led by a decline in the biotechnology sector.

Major U.S. stock indexes had been significantly higher in most of the morning and early afternoon trade following comments from a Chinese official indicating that the country's government was ready to take steps to support its slowing economy.

But a 2.6 percent drop in the Nasdaq biotechnology index led the major indexes to session lows. The biotech sector is down nearly 7 percent for the week and down about 13 percent for the month.

Gilead Science shares were off 3.3 percent at $69.03 and Biogen Idec shares were down 4.1 percent at $297. The two stocks were the S&P 500's biggest decliners.

"Almost everyday this week, we've been seeing a pattern of the market opening higher and then selling off towards the close. Some are saying that it's the smart money is selling off at the end of the day. If we see that pattern again today, that would be concerning," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

The Dow Jones industrial average rose 26.05 points or 0.16 percent, to 16,290.28. The S&P 500 gained 5.46 points or 0.3 percent, to 1,854.50. The Nasdaq Composite dropped 0.063 of a point to 4,151.17.

For the week, the Dow was down 0.1 percent, while the S&P 500 was off 0.6 percent and the Nasdaq was down 2.9 percent.

The week's losses were concentrated in the Nasdaq as investors took profit in some of the market's biggest outperformers, mostly in the Internet and biotech space. Some analysts say the selloff in "momentum" stocks has yet to run its course, though this could benefit more value-orientated names. A move to such companies helped limit the Dow's weekly decline.

One of the more prominent momentum names, Netflix Inc , continued its downward trend, slipping 1.6 percent to $358.50. If the online movie rental company's stock closes lower on Friday, it will have dropped for 16 of the last 18 sessions, losing about a fifth of its value over that period.

In the latest economic data, personal income and consumption both rose 0.3 percent in February, the latest indication that weak data earlier this year was due to bad weather rather than worsening fundamentals.

Red Hat Inc reported fourth-quarter earnings that beat expectations late Thursday, though the company gave a full-year profit view that was below forecasts. Red Hat's stock fell 7.2 percent to $52.07.

U.S. consumer sentiment fell in March as consumers were less hopeful about the prospects for the overall economy, according to the Thomson Reuters/University of Michigan's final March reading on the overall index on consumer sentiment. While the report was up by 0.1 from the preliminary March read, it was also slightly under expectations.

China's Premier Li Keqiang said the government had the necessary accommodative policies in place and would push ahead with infrastructure investment.

(Editing by Jan Paschal)

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