* U.S. retail sales growth flat; dollar dips
* Nordstrom rallies after strong quarterly report
* Oil prices rise nearly 2 pct, energy stocks climb
* Indexes down: Dow 0.3 pct, S&P 0.2 pct, Nasdaq 0.1 pct (Updates to afternoon trading)
By Noel Randewich
Aug 12 (Reuters) - U.S. stocks fell from record highs on Friday as tepid retail sales and producer price data dampened investor confidence in the economy's expansion.
The retreat in stocks followed record high closes the previous day for all three major indexes on a recent rally that has many investors worried about pricey valuations.
"There's a fear of - 'Am I missing out and is it too late?'" said Jeff Carbone, senior partner at Cornerstone Financial Partners in Cornelius, North Carolina. "And on the opposite side - 'Am I at the top and should I get out?'"
Dow Chemical fell 2.51 percent and was the top drag on the materials index, followed by a 1.98 percent drop in DuPont a day after European Union regulators opened a full investigation of their $130 billion merger agreement.
U.S. retail sales growth was unexpectedly flat in July as people cut back on buying clothes and other goods, while the producer price index fell 0.4 percent in July, the biggest drop in nearly a year.
Cooling consumer spending and tame inflation suggest the Federal Reserve will probably not raise interest rates anytime soon despite a robust labor market.
"The data underscores that the Fed doesn't need to be aggressive about raising interest rates," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.
At 2:11 pm ET, the Dow Jones industrial average was down 0.3 percent at 18,557.36 and the S&P 500 had lost 0.2 percent to 2,181.39.
The Nasdaq Composite dipped 0.11 percent to 5,222.90.
Oil prices rose nearly 2 percent as the dollar slipped following the release of the economic data.
Exxon Mobil rose 1.38 percent and gave the biggest boost to the Dow, while Chevron added 0.6 percent.
Seven of the 10 major S&P 500 indexes were lower, with the materials sector falling 1.3 percent. Financials dipped 0.4 percent.
Nordstrom rose 8.57 percent after the department store chain operator reported better-than-expected comparable sales and quarterly profit.
Declining issues outnumbered advancing ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored decliners.
The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 60 new highs and 27 new lows. (Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Dan Grebler)