(Updates to 16:07 EDT)

By Stephen Culp

NEW YORK, June 11 (Reuters) - The Nasdaq and the S&P 500

rose on Tuesday to end at all-time highs, reversing early losses

as investors prepared for upcoming inflation data and the U.S.

Federal Reserve's policy meeting.

Benchmark Treasury yields extended their decline ahead of

the Labor Department's Consumer Price Index (CPI) report.

Apple ( AAPL ) shares helped put the tech-heavy Nasdaq out

front, while the blue-chip Dow Jones Industrial Average ended

lower. The S&P 500 also turned green as Fed policy makers

convened for their two-day policy meeting.

"Investors are playing it safe, with tomorrow's CPI

report even though it's expected to show a slight decline," said

Sam Stovall, chief investment strategist of CFRA Research in New

York.

"(But) we continue to see all-time highs, and you don't

want to make emotional decision," Stovall added. "CPI could come

in weaker than expected, and the Fed could sound optimistic that

at least one rate cut could occur before year-end."

While investors expect no change to the Fed funds target

rate, the Federal Open Markets Committee (FOMC) is expected to

release its Summary of Economic Projections, which should help

illuminate the central bank's forward policy path.

The data-reliant Fed will watch whether the CPI data due

early Wednesday shows, as expected, that inflation was still

meandering down toward the central bank's 2% annual target.

The report follows Friday's hotter-than-expected U.S. wage

growth numbers.

French President Emanuel Macron's announcement that he will

call a flash election kept adding fuel to the fire of a

tumultuous year in geopolitics, which has boosted the dollar.

"With Europe leaning to the right, with Modi losing his

majority, and Mexico's election, change is in the air," Stovall

said, "more uncertainty in Europe will add to the strength of

the U.S. dollar."

The Dow Jones Industrial Average fell 120.62 points,

or 0.31%, to 38,747.42, the S&P 500 gained 14.53 points,

or 0.27%, to 5,375.32 and the Nasdaq Composite added

151.02 points, or 0.88%, to 17,343.55.

European shares extended the previous session's losses

sparked by political uncertainties in France, as investors

turned their focus to the Fed.

The pan-European STOXX 600 index lost 0.93% and

MSCI's gauge of stocks across the globe shed

0.06%.

Emerging market stocks lost 0.41%. MSCI's broadest index of

Asia-Pacific shares outside Japan closed 0.64%

lower, while Japan's Nikkei rose 0.25%.

U.S. Treasury yields dipped after a well-received auction

ahead of the CPI data.

Benchmark 10-year notes last rose 18/32 in price

to yield 4.3981%, from 4.469% late on Monday.

The 30-year bond last rose 33/32 in price to

yield 4.5318%, from 4.595% late on Monday.

The dollar gained some ground against a basket of world

currencies, touching a four-week high in anticipation of the CPI

inflation report, while the euro dropped amid political turmoil

brought about by far right gains in European elections and the

snap election in France.

The dollar index rose 0.09%, with the euro

down 0.22% to $1.0739.

The Japanese yen weakened 0.03% to 157.11 per dollar, while

sterling was last trading at $1.274, up 0.08% on the day.

Crude oil prices edged higher after the Energy Information

Administration (EIA) raised its world oil demand forecast.

U.S. crude rose 0.21% to settle at $77.90 per

barrel, while Brent settled at $81.92 per barrel, up

0.36% on the day.

Gold prices reversed an earlier drop and were last modestly

higher as investors kept their focus on the Fed's economic

outlook.

Spot gold added 0.2% to $2,315.46 an ounce.