* Financial stocks hit by fading rate hike prospects
* Dow up 0.07 pct, S&P down 0.02 pct, Nasdaq up 0.35 pct (Updates to late afternoon, adds commentary, changes byline)
By Sinead Carew
Oct 9 (Reuters) - The S&P 500 was down slightly on Friday as investors paused after several days of gains, led by declines in the energy sector as oil prices were largely unchanged.
The S&P financial sector was the second biggest decliner as investors bet the Federal Reserve would not be inclined to raise interest rates soon. Bank profits would benefit from a rate hike.
Investors saw further signs of dovishness in the release on Thursday of minutes from the Fed's September meeting, which showed that policymakers decided to hold interest rates steady as they sought evidence a global economic slowdown would not knock the U.S. economy off course.
New York Fed President William Dudley on Friday told CNBC that the Fed could hike rates this year, though it was not a commitment and the move will depend on economic data. The central bank has two remaining policy meetings this year, on Oct. 27-28 and Dec. 15-16.
U.S. stocks ended higher on Thursday after the Fed minutes were released, putting the S&P 500 on track for its best week this year, even after the Friday afternoon dip.
"We've had a super run," said Jon Merriman, chief executive officer at Merriman Holdings Inc in San Francisco. "You had sentiment that was extremely bad eight days ago. Sentiment has become more optimistic. That signals that it's time for the market to roll over."
At 3:07 p.m. (1907 GMT) the Dow Jones industrial average rose 11.66 points, or 0.07 percent, to 17,062.41, the S&P 500 lost 0.49 points, or 0.02 percent, to 2,012.94, and the Nasdaq Composite added 16.67 points, or 0.35 percent, to 4,827.46.
Five of the 10 major S&P sectors were lower. The energy sector was down 0.9 percent as oil prices settled roughly unchanged. The financial index dropped 0.7 percent.
Investors were also starting to look at earnings reports to gauge how companies are faring with slowing global economic growth.
"When management starts talking about what they're doing on addressing the China issue, the stronger dollar, as well share buybacks or dividend increases, that is what's going to dictate market action and people's focus," said Kevin Kelly, chief investment officer of Recon Capital Partners.
Alcoa, one of the first S&P components to report earnings, fell 6 percent to $10.34 and was the S&P's biggest percentage decliner after it reported disappointing results.
Apparel retailer Gap was also down 6 percent, at $27.22, after reporting weak September same-store sales.
Advancing issues outnumbered declining ones on the NYSE by 1,640 to 1,354, for a 1.21-to-1 ratio on the upside; on the Nasdaq, 1,493 issues rose and 1,242 fell for a 1.20-to-1 ratio favoring advancers.
The S&P 500 posted 22 new 52-week highs and one new low; the Nasdaq recorded 69 new highs and 26 new lows. (Additional reporting by Abhiram Nandakumar and Tanya Agrawal in Bengaluru; Editing by Savio D'Souza and Leslie Adler)