US STOCKS-Wall St edges up, but Iraq still in focus
* CPI tops expectations, helping lift financial stocks
* Iraq violence remains in focus; oil dips
* Fed begins two-day policy meeting; few changes expected
* Dow up 0.2 pct; S&P 500 up 0.2 pct; Nasdaq up 0.5 pct (Updates to mid-afternoon)
By Ryan Vlastelica
NEW YORK, June 17 (Reuters) - U.S. stocks rose modestly on Tuesday afternoon, recovering from morning declines though investors kept watching the turmoil in Iraq as the Federal Reserve began a two-day policy meeting.
Iraq's Shi'ite rulers defied Western calls to reach out to Sunnis to defuse an uprising in the north of the country, declaring a boycott of Iraq's main Sunni political bloc and accusing Sunni power Saudi Arabia of promoting "genocide."
Investors have been monitoring the situation in Iraq, worried that it could lead to sharply higher oil prices for an extended period. U.S. crude prices slipped 0.5 percent to $106.31 per barrel, following a jump of more than 4 percent last week.
"The Iraq situation could continue to destabilize markets, and there are a lot of unknown factors that could keep oil prices elevated. That said, valuations for stocks are not alarmingly high, and there aren't many alternatives for investors," said Bernard Baumohl, a managing director at the Economic Outlook Group in Princeton, New Jersey. Continuación...