US STOCKS-Wall St turns flat after early drop; Iraq tensions eyed
* CPI tops expectations, points to firming inflation
* Housing starts fall more than anticipated
* Fed begins two-day policy meeting
* Indexes up: Dow 0.04 pct, S&P 0.05 pct, Nasdaq 0.35 pct (Updates to market open)
By Chuck Mikolajczak
NEW YORK, June 17 (Reuters) - U.S. stocks bounced back from earlier declines Tuesday to gain modestly as investors shrugged off weaker-than-expected housing data and the latest flaring of tensions in Iraq, and as the Federal Reserve began a two-day policy meeting.
Housing starts and building permits fell more than expected in May, as groundbreaking for homes dropped 6.5 percent to a seasonally adjusted annual pace of 1 million units.
But the Consumer Price Index increased 0.4 percent last month, pointing to a steady firming of inflation pressures which should ease concerns of some Fed officials that inflation was running too low.
The CPI data boosted yields on the 10-year Treasury notes as high as 2.65 percent, which helped lift financial stocks 0.6 percent as the best performing S&P sector. Continuación...