* Dow hits record-high before reversing course
* Endo down after agreeing to buy Par Pharmaceutical
* Altera up on report of possible deal with Intel
* Ann rises after Ascena Retail takeover offer
* Indexes down: Dow 0.1 pct, S&P 0.02 pct, Nasdaq 0.02 pct (Adds details, changes comment, updates prices)
By Sweta Singh
May 18 (Reuters) - U.S. stocks lost their early gains on Monday, after the Dow Jones industrial average hit a record high, as homebuilder confidence index fell, adding to a stream of weak economic data that has muddied the outlook for interest rates.
The National Association of Home Builders/Wells Fargo Housing Market index fell to 54 from 56 the month before. Economists polled by Reuters had predicted the index would rise to 57.
The U.S. economy is struggling to rebound strongly enough for the Federal Reserve to raise interest rates before September, analysts have said.
"Right now with the way things are going, especially with the yield curve getting steeper, it's going to be less and less likely the Fed will raise rates in September," John Burke, CEO of Burke Financial Strategies in New York.
"It looks to be at the very end of the year or maybe even early 2016."
Data released on Friday showed that industrial output slipped and consumer sentiment fell. The S&P gained 0.08 percent to close at a record high of 2,122.73, modestly exceeding its previous peak on April 24.
The Federal Reserve could look at a rate hike in June if the economy is strong enough, Chicago Fed President Charles Evans said on Monday, although he argued for rates to start rising in early 2016.
Half of the 10 major S&P 500 sectors were down, with the consumer staples index weighing the most with a 0.42 percent fall.
Procter & Gamble was the biggest drag on the index with a 0.6 percent fall.
At 10:50 a.m. ET (1450 GMT) the Dow Jones industrial average was down 18.63 points, or 0.1 percent, at 18,253.93, before hitting a record high of 18,289.54 earlier in the session.
The S&P 500 was down 0.48 points, or 0.02 percent, at 2,122.25 and the Nasdaq Composite was down 1.18 points, or 0.02 percent, at 5,047.11.
Endo International's shares fell 2.7 percent to $83.11 after the generic drugmaker said it would buy privately held Par Pharmaceutical from TPG Capital in a $8.05 billion deal.
Altera rose 5.6 percent to $46.87 after the New York Post reported that the company had resumed talks with Intel on a possible deal. Intel was little changed.
Ann Inc gained 20 percent to $46.50 after the company agreed to be bought by Ascena Retail for $2.15 billion in cash and stock.
Alibaba fell 1.3 percent to $87.50 after a group of luxury goods makers sued the company on Friday, contending that the Chinese e-commerce giant knowingly made it possible for counterfeiters to sell their products throughout the world.
Declining issues outnumbered advancers on the NYSE by 1,779 to 1,090, for a 1.63-to-1 ratio on the downside; on the Nasdaq, 1,335 issues fell and 1,238 advanced for a 1.08-to-1 ratio favoring decliners.
The S&P 500 index was posting 20 new 52-week highs and two new lows; the Nasdaq Composite recorded 64 new highs and 29 new lows. (Additional reporting by Tanya Agrawal in Bengaluru; Editing by Saumyadeb Chakrabarty)