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Stocks edge up after muted open on Wall Street

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Oil falls after Trump says Iran wants to negotiate

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Trump says "Nobody knows what I am going to do"

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Fed expected to leave rates unchanged

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U.S. Treasury yields fall

By Isla Binnie and Naomi Rovnick

NEW YORK/LONDON June 18 (Reuters) -

Wall Street indexes posted modest gains and oil prices

dipped on Wednesday as investors weighed the impacts of a Middle

East conflict and a U.S. rate decision on a global economy

already grappling with uncertainty stemming from U.S. economic

policy.

Brent crude oil prices initially extended their recent

rise as the

Israel-Iran air war

entered its sixth day, feeding concerns over global oil

supply, before falling 1.52% to $75.31 per barrel after U.S.

President Donald Trump said Iran wanted to negotiate.

Stock buyers made cautious inroads in early trading on

Wall Street, giving a 0.50% push to both the Dow Jones

Industrial Average and the S&P 500 and a 0.56% boost to

the Nasdaq Composite.

While geopolitics were the biggest immediate concern,

other lingering doubts included a squabble over President

Trump's tax bill, said Chris Maxey, Managing Director and Chief

Market Strategist at New York-based Wealthspire.

"Uncertainty began at the start of the year, and it felt

like it just kept growing ... It's uncertain about what's coming

next with respect to the (U.S.) tax package, what's going to

happen with the Federal Reserve, what's going to happen in the

Middle East," he said.

"People are trying to digest all of this information

without a huge amount of clarity," Maxey added.

Trump declined to answer questions on whether the U.S.

was planning to strike Iran or its nuclear facilities, saying:

"Nobody knows what I am going to do."

WATCH THE FED FOR CLUES

The Fed is expected to keep its main funds rate steady on

Wednesday in the 4.25%-4.50% range it has held since December.

It is expected to issue projections, known as a dot plot, that

signal it will not move decisively for months to come.

Signs of fragility in the U.S. economy make for a

challenging backdrop.

U.S. retail sales fell by a larger-than-expected 0.9% in

May, data showed on Tuesday, the biggest drop in four months,

while labour market indicators are showing weakness.

"Markets are going to be closely watching the Fed's

quarterly dot plot for clues on how and when the central bank

will resume its cutting cycle," Insight Investment co-head of

global rates Harvey Bradley said.

"As tensions in the Middle East have the potential to

threaten the inflation picture further, it cannot be ruled out

that projections adjust to reflect just one rate cut this year,"

he added.

U.S. Treasury yields fell again on Wednesday, continuing

a slide on Tuesday prompted by investors calculating that

geopolitical risks abroad were greater than the chances the U.S.

debt pile becomes unmanageable.

The benchmark 10-year note was last yielding

2.6 basis points less, at 4.365%, from 4.391% late on Tuesday.

The two-year yield, which is more sensitive

to changes in expectations for Fed interest rates, fell 1.1

basis points to 3.939%, from 3.95% late on Tuesday.