* Indexes: Dow up 0.60%, S&P 500 up 0.18%, Nasdaq down 0.10%

* U.S. equity funds record first weekly outflow in three

weeks

* Space stocks dip ahead of debut after huge run-up this

quarter

* Adobe drops after exit of CFO Dan Durn

(Updates after market open)

By Johann M Cherian and Twesha Dikshit

June 12 (Reuters) - The S&P 500 and Dow inched higher in

choppy trading on Friday, buoyed by expectations for an imminent

Middle East peace deal, while investors geared up for the market

debut of Elon Musk's SpaceX, which is estimated to be Wall

Street's biggest public listing in history.

U.S. President Donald Trump's comments on Thursday, which

suggested that a deal to end the Middle East conflict and reopen

the crucial Strait of Hormuz could be signed as early as this

weekend, lifted sentiment globally, even as Tehran said that a

final decision was pending.

SpaceX is expected to start trading on the Nasdaq for the

first time later in the day and is likely to be immediately

ranked as the seventh biggest publicly listed U.S. company, with

a potential valuation of $1.75 trillion.

Only about 3% to 4% of SpaceX's shares are expected

to be available for trading with Reuters reporting that they

were oversubscribed nearly four times.

"A dominant company with a $1.77 trillion valuation doesn't

just quietly enter the market. It's going to cannibalize

capital," said Joel Shulman, CEO of ERShares, which manages an

ETF with SpaceX exposure.

Shares of other space stocks have soared in the lead-up to

the debut. They moved lower in early trading Friday, with Rocket

Lab ( RKLB ) down 5.4%, Intuitive Machines ( LUNR ) and Planet

Labs shedding 8.3% and 6.6%, respectively, while funds

holding shares of SpaceX such as Fundrise Innovation Fund

rose 3.4%.

Eight of 11 major S&P 500 sectors moved higher, with

materials shares leading gains.

The Philadelphia SE Semiconductor Index dipped 0.3%,

with chipmakers losing some steam following a sharp rebound in

the previous session.

Shares of Broadcom ( AVGO ), Micron and Marvell

Technology ( MRVL ) were down between 1% and 2.5%.

Analysts believe some of the weakness in U.S. stocks and

bitcoin's 16% fall last week could be due to traders

trimming holdings ahead of SpaceX's debut.

"In the absence of fresh capital coming in, it's a

mathematical certainty that it's going to have an impact on

other companies," Shulman said.

U.S. equity funds saw their first weekly outflow in three,

and earlier this week the technology index confirmed a

correction.

At 09:32 a.m. ET, the Dow Jones Industrial Average

rose 303.74 points, or 0.60%, to 51,152.85, the S&P 500

gained 13.30 points, or 0.18%, to 7,407.60 and the Nasdaq

Composite lost 25.38 points, or 0.10%, to 25,784.28.

The three main U.S. stock indexes are set for a muted end to

the week, amid uncertainty surrounding the Iran conflict and

concerns that a rally in AI stocks has gone too far.

SpaceX, which also includes Starlink and xAI, has already

defied some Wall Street conventions. Index providers such as

Nasdaq and FTSE Russell have tweaked their entry requirements

for its inclusion, while the company also set its stock price at

$135, even before the roadshow began, reflecting Musk's sway

over the IPO.

Some analysts have, however, voiced caution over the

fundamentals of the company, which posted more than $4 billion

in annual losses last year.

Data earlier this week showed inflation pressures were

mounting, driven by elevated energy costs stemming from the

Mideast conflict.

Oil prices slid below $90 a barrel following Trump's

remarks, and traders pushed their expectations for an interest

rate hike by the Federal Reserve to December from October

earlier this week, the CME Group's FedWatch tool showed.

Adobe slid 8.6% after the exit of CFO Dan Durn.

Advancing issues outnumbered decliners by a 2.06-to-1 ratio

on the NYSE, and by a 1.36-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and two new lows,

while the Nasdaq Composite recorded 78 new highs and 20 new

lows.