(Corrects Reuters Instrument Code for the financial index in paragraph 9)
* Minutes show Fed in no rush to raise rates
* Financial stock hit by fading rate hike prospects
* American, United Airline forecast lift airline stocks
* Dow up 0.04 pct, S&P down 0.09 pct, Nasdaq up 0.22 pct
By Abhiram Nandakumar
Oct 9 (Reuters) - Wall Street was little changed in choppy trading on Friday as investor optimism due to fading chances of an interest rate hike this year was offset by a fall in energy and financial stocks.
Minutes from the Federal Reserve's September meeting showed policymakers were worried about a global economic slowdown weighing on the economy, which investors took to mean that rates would stay at near-zero levels this year.
"The fact that we had a correction in August gives the market some room to move," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
"I think we could see a short drift higher," Frederick said, adding that stocks were likely to inch up slowly but steadily.
New York Fed President William Dudley told CNBC that the Fed could hike rates this year, though it was not a commitment and the move will depend on economic data. The central bank next meets on Oct. 27-28 and then on Dec 15-16.
U.S. stocks ended higher on Thursday after the minutes were released, putting the S&P 500 on track for its best week this year. But the dip on Friday afternoon, lowered the possibility.
At 13:05 ET (1705 GMT) the Dow Jones industrial average was up 7.38 points, or 0.04 percent, at 17,058.13.
The S&P 500 was down 1.86 points, or 0.09 percent, at 2,011.57 and the Nasdaq composite was up 10.58 points, or 0.22 percent, at 4,821.37.
Six of the 10 major S&P sectors were lower. The financial index fell 0.79 percent, leading the decliners, as chances of a rate hike this year faded. Goldman and Bank of America both fell 1 percent.
The energy sector was down 0.75 percent as crude oil prices seesawed, with traders closing positions after a recent rally. Exxon and Chevron fell about 0.5 percent and were among the top three drags on the Dow.
The industrial sector was up 0.49 percent, leading the S&P gainers, helped by a rally in airline stocks that was driven by strong forecasts from American Airlines and United Continental.
American Airlines rose 5.3 percent and United gained 6.2 percent. The Dow Jones U.S. Airlines index was up 3.8 percent, its strongest gain in about three weeks.
Investor focus will turn to earnings reports to gauge how companies have weathered the turbulence in the past three months, especially in late August, due to worries about slowing growth.
"When management starts talking about what they're doing on addressing the China issue, the stronger dollar, as well share buybacks or dividend increases, that is what's going to dictate market action and people's focus," said Kevin Kelly, CIO of Recon Capital Partners.
Gap fell 5.7 percent to $27.34 after reporting weak September same-store sales. The stock was the biggest decliner on the S&P 500, followed by Alcoa.
Alcoa fell 4.7 percent to $10.49 after it reported disappointing results.
Tesla declined 2.3 percent to $221.40 after Barclays downgraded the stock to "underweight".
Advancing issues outnumbered decliners on the NYSE by 1,672 to 1,270. On the Nasdaq, 1,508 issues rose and 1,155 fell.
The S&P 500 index showed 22 new 52-week highs and one new low, while the Nasdaq recorded 64 new highs and 22 new lows. (Reporting by Abhiram Nandakumar and Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)