* Stocks fall after release of Fed's April meeting minutes
* Financials leading sector after minutes released
* Dow down 0.09 pct, S&P down 0.04 pct, Nasdaq up 0.35 pct (Updates with comments, late afternoon trading)
By Lewis Krauskopf
May 18 (Reuters) - Wall Street turned negative on Wednesday after minutes from the Federal Reserve's April policy meeting showed the U.S. central bank will likely raise interest rates in June if supported by economic data.
That view, expressed by most Fed policymakers at the last policy meeting, suggests the bank is much closer to lifting rates again than Wall Street had anticipated.
Following the release of the minutes, traders were projecting a 34-percent chance for the Fed to raise rates in June up from 15 percent on Tuesday, according to the CME FedWatch tool. For July, traders see a roughly 50-50 chance of rates rising against only a one-in-three chance as of Tuesday.
"Most expectations, if they even exist, were pushed into July, but for the most part the market has repositioned for the Fed not to do anything ... So this is a bit of a surprise to see the Fed sounding this hawkish in the minutes," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
The Dow Jones industrial average was down 49.23 points, or 0.28 percent, at 17,480.75, the S&P 500 was down 5.25 points, or 0.26 percent, at 2,041.96 and the Nasdaq Composite added 7.22 points, or 0.15 percent, at 4,722.95.
The three indexes had been solidly higher ahead of the minutes.
Financials, seen benefiting in a rising rate environment, were the leading main S&P sector, up 1.4 percent. Seven of the 10 sectors were lower in afternoon trade.
Members of the Fed's policy-setting committee said recent economic data made them more confident inflation was rising toward their 2-percent target and were less concerned about a global economic slowdown, according to the minutes from the April 26-27 meeting.
"I think it is high time that the Federal Reserve starts to normalize policy. We've tried this for seven years, let's try something new," said Jim Paulsen, chief investment strategist with Wells Capital Management in Minneapolis. "I really think markets are going to be OK with this." (Additional reporting by Rodrigo Campos in New York, Editing by James Dalgleish and Nick Zieminski)