* Greece talks suffer setback after IMF quits
* Consumer sentiment surges in June
* Next week's Fed policy meeting eyed
* Twitter rises after CEO quits abruptly
* Indexes down: Dow 0.9 pct, S&P 0.7 pct, Nasdaq 0.6 pct (Updates to late afternoon)
By Caroline Valetkevitch
June 12 (Reuters) - U.S. stocks declined late Friday afternoon as Greek debt talks hit a stalemate and worries resurfaced over how soon the Federal Reserve might raise interest rates.
The energy index, down 1.3 percent, led the declines in the S&P 500 as oil prices fell for the second day in a row.
Upbeat consumer sentiment and other data added to views the economy may be regaining momentum, which increased anxiety for investors ahead of next week's Fed Open Market Committee meeting, the central bank's last meeting before September.
Adding to cautiousness a day after the International Monetary Fund quit bailout talks with Greece, EU officials said they had held their first formal discussions on the worst-case scenario for the country.
"You have to question whether they're looking at reality. If the IMF sends their negotiators home and the rest of the EU is talking like this isn't happening it may be political rhetoric aimed at the Greek citizens," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
At 2:32 p.m., the Dow Jones industrial average fell 154.65 points, or 0.86 percent, to 17,884.72, the S&P 500 lost 15.65 points, or 0.74 percent, to 2,093.21 and the Nasdaq Composite dropped 30.93 points, or 0.61 percent, to 5,051.58.
U.S. consumer sentiment surged in early June. The upbeat report capped a week of strong economic data and was the latest indication that growth was regaining momentum after a sluggish start to the second quarter.
The S&P 500 was set to end unchanged for the week, while the Nasdaq Composite was on track to close down for the third straight week.
An increase in interest rates will tighten the flow of easy money, which has driven stocks and bond prices to record highs, and raise borrowing costs for companies.
Economists and top Wall Street banks expect the Fed to raise rates in September, in what could be the central bank's first hike in almost a decade.
Twitter Inc shares were up 0.2 percent at $35.90, a day after Chief Executive Officer Dick Costolo announced he was stepping down.
Declining issues outnumbered advancing ones on the NYSE by 2,019 to 966, for a 2.09-to-1 ratio on the downside; on the Nasdaq, 1,600 issues fell and 1,120 advanced for a 1.43-to-1 ratio favoring decliners.
The benchmark S&P 500 index was posting 5 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 64 new highs and 26 new lows. (Additional reporting by Tanya Agrawal and Sinead Carew; Editing by Saumyadeb Chakrabarty and Meredith Mazzilli)