* Greece talks suffer setback after IMF quits
* May producer prices record biggest gain in more than 2-1/2 years
* Apple weighs on Nasdaq; IBM on Dow
* Twitter rises after CEO quits
* Indexes down: Dow 0.7 pct, S&P 0.6 pct, Nasdaq 0.5 pct (Updates to open)
By Tanya Agrawal
June 12 (Reuters) - U.S. stocks opened weaker on Friday, pressured by a setback in Greek debt talks and increased chances of a rate hike in September as a recovery in the U.S. economy gathers steam.
Greece said it would not cross its "red lines" as it looked to intensify political negotiations for an agreement, saying IMF's move to quit bailout talks was aimed at putting pressure on Athens.
Investors were also edgy ahead of the U.S. Federal Reserve's Open Market Committee meeting next week, the central bank's last meeting before September, which may provide clues regarding the timing of an interest rate hike.
An increase in rates raises will tighten the flow of easy money that has driven stocks and bond prices to record highs and raise borrowing costs for companies.
Economists and top Wall Street banks expect the Fed to raise rates in September, in what could be the central bank's first hike in almost a decade.
"Investors don't want to make any big moves ahead of the meeting and Greece certainly continues to be a big factor," said Adam Sarhan, chief executive of Sarhan Capital in New York.
U.S. stocks climbed on Thursday as retail sales data lifted the outlook for consumer spending and as healthcare shares gained.
At 9:50 a.m. ET (1350 GMT) the Dow Jones industrial average was down 117.28 points, or 0.65 percent, at 17,922.09, the S&P 500 was down 11.7 points, or 0.55 percent, at 2,097.16 and the Nasdaq Composite was down 25.74 points, or 0.51 percent, at 5,056.77.
Exxon Mobil's 1 percent fall weighed the most on the S&P 500, while Apple's 0.3 percent decline was the biggest drag on Nasdaq. The Dow was weighed down by IBM's 0.9 decline.
All the 10 major S&P 500 sectors were lower, with the energy index leading the declines.
U.S. producer prices in May recorded their biggest increase in more than 2-1/2 years as the cost of gasoline and food rose, suggesting that an oil-driven downward drift in prices was nearing an end.
The stabilization in producer prices should support views that the Federal Reserve will raise interest rates this year. While the labor market had tightened, there had been few clear signs that inflation was poised to rise back toward the Fed's 2 percent target.
U.S. consumer sentiment rose more than expected in June, with the index on consumer sentiment coming in at 94.6, above the forecast of 91.5 among economists polled by Reuters.
Twitter Inc's shares were up 2.2 percent at $36.63, a day after Chief Executive Officer Dick Costolo abruptly announced he was stepping down.
T-Mobile rose 2.4 percent to $39.03 after sources said Dish Network was in talks to hire banks that would provide between $10 billion and $15 billion in debt to finance the cash portion of its bid for the company. Dish was down 1.3 percent at $71.87.
Leapfrog Enterprises slumped 18.4 percent to $1.69 after the toymaker posted a wider quarterly loss.
Declining issues outnumbered advancers on the NYSE by 2,012 to 670. On the Nasdaq, 1,538 issues fell and 749 rose.
One stock on the S&P 500 index hit a 52-week high and five a 52-week low. The Nasdaq recorded 24 new highs and 16 new lows. (Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)