*

Wall Street closes little changed after early gains

*

Treasury yields rise, dollar stands firm

*

Fed meets on Wednesday, rate cut expected

*

US retail sales, manufacturing production increase

(Updates prices at 4:32 p.m. EDT)

By Isla Binnie

NEW YORK, Sept 17 (Reuters) - U.S. stock markets ended

nearly flat after hitting record highs on Tuesday and the dollar

stood firm as strong economic data allayed slowdown fears and

investors braced for the Federal Reserve's expected move to cut

interest rates for the first time in more than four years.

Signs of a slowing job market over the summer and more

recent media reports had contributed in the past week to betting

the Federal Reserve would move more drastically than usual at

its meeting on Wednesday and shave off half a percentage point,

to head off any weakness.

Data on Tuesday showed U.S. retail sales rose in August and

production at factories rebounded. Stronger data could

theoretically weaken the case for a more aggressive cut.

"That points to a healthy state of the economy," said Peter

Cardillo, chief market economist at Spartan Capital Securities.

Cardillo expects Fed Chair Jerome Powell to cut rates by 25

basis points on Wednesday, and would be looking for clues to

future moves.

"He might hint the Fed could be more aggressive in the

coming meetings ... I think they start off being cautious," he

said.

Across the broader market, traders are still betting on a

63% probability that the Fed will cut rates by 50 basis points

on Wednesday and a 37% probability of a 25 basis-point cut,

according to CME Group's FedWatch tool.

The S&P 500 rose to an all-time intraday high at one

point in the session, but flattened in afternoon trading and

closed 0.03% higher at 5,634.58. The Dow Jones Industrial

Average fell 0.04%, to 41,606.18.

The tech-heavy Nasdaq Composite bucked the Wall

Street trend to close 0.20% higher at 17,628.06, while MSCI's

All-World index rose 0.04% to 828.72.

"What you're seeing in this afternoon's trading is the way

we pulled off of the all-time high ... because tomorrow

somebody's going to be disappointed," said Russell Price, chief

economist at Ameriprise Financial Services in Troy, Michigan.

STRONGER DOLLAR

The dollar perked up from its recent lows against most major

currencies and stayed higher throughout the day. The index

, which measures the greenback against a basket of

currencies, rose 0.28% to 100.98.

Beyond the United States, the Bank of England (BoE) and the

Bank of Japan (BOJ) also meet this week to discuss monetary

policy, but unlike the Fed are expected to keep rates on hold.

The dollar kept strengthening against the Japanese yen

, gaining 1.19% to 142.29.

The two-year U.S. Treasury yield, which typically

reflects near-term rate expectations, rose 4.4 basis points to

3.5986%, having fallen to a two-year low of 3.528% in the

previous session.

The benchmark 10-year yield rose 2.3 basis

points to 3.644%, from 3.621% late on Monday.

In Asia, China's sputtering economic recovery continued to

weigh on sentiment after data over the weekend showed the

country's industrial output growth slowed to a five-month low in

August, while retail sales and new home prices weakened further.

Oil prices rose as the industry continued to survey the

impact of Hurricane Francine on output in the U.S. Gulf of

Mexico.

U.S. crude settled 1.57% higher at $71.19 a barrel.

Brent finished the day at $73.7 per barrel, up 1.31%.

Spot gold slid 0.51% to $2,569.51 an ounce, having

touched a record high on Monday.