* Fed's Fischer hints at more than one U.S. rate hike this year
* Fed Chair Yellen gives no indication of rate hike's timing
* Herbalife drops on report of Icahn's planned stake sale
* Indexes: Dow off 0.29 pct, S&P off 0.16 pct, Nasdaq up 0.13 pct (Updates to close)
By Chuck Mikolajczak
NEW YORK, Aug 26 (Reuters) - U.S. stocks ended modestly lower after a volatile session on Friday, having bounced between gains and losses as investors wrestled with the likely timing of a U.S. interest rate hike following comments from top Federal Reserve officials.
The S&P 500 rose after Fed Chair Janet Yellen said the case for raising rates had strengthened but did not indicate when the Fed would act.
Yellen told a gathering of central bankers from around the world in Jackson Hole, Wyoming, the U.S. economy was nearing the central bank's goals of maximum employment and price stability but that future hikes should be "gradual".
Stocks later traded lower after hawkish comments from Fed Vice Chair Stanley Fischer raised the possibility of a rate hike as soon as next month.
The S&P 500 rose as much as 0.7 percent and declined by as much as 0.6 percent during the session.
The perceived chances of a rate hike in September climbed to 36 percent from 21 percent the previous day, according to CME Group's FedWatch tool. Traders are now pricing in a 63.7 percent likelihood of a hike in December, up from 51.8 percent Thursday.
Banking shares, which stand to gain in a higher rate environment, advanced. The KBW Nasdaq bank index rose 0.74 percent. In contrast, sectors likely to be hurt by higher rates, such as utilities and telecoms, fell.
The S&P utilities index dropped 2.1 percent, its worst day in four months. Telecoms fell 1.1 percent.
"When Fischer spoke and suggested September was more live than what investors had taken from Yellen comments, that did of course lead to a little bit of concern that the move would be sooner than what investors were overall anticipating," said investment strategist Kate Warne at Edward Jones in St. Louis.
The Dow Jones industrial average fell 53.01 points, or 0.29 percent, to 18,395.4, the S&P 500 lost 3.43 points, or 0.16 percent, to 2,169.04 and the Nasdaq Composite added 6.71 points, or 0.13 percent, to 5,218.92.
Mirroring the market's swings, the CBOE Volatility index , known as Wall Street's "fear gauge", touched a seven-week high of 14.93. It was last up 0.4 percent at 13.69.
In company news, Herbalife lost 2.3 percent to $60.50 after a report said Carl Icahn, the nutritional supplement maker's top shareholder, was looking to sell his stake.
Declining issues outnumbered advancing ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored decliners.
The S&P 500 posted 29 new 52-week highs and one new low; the Nasdaq Composite recorded 118 new highs and 26 new lows.
About 6.57 billion shares changed hands in U.S. exchanges, compared with the 6.16 billion daily average over the last 20 sessions. (Reporting by Chuck Mikolajczak; Editing by James Dalgleish)