* Fed’s Bullard: Much closer to normal economy than most realize
* U.S.-listed shares of Barclays fall on fraud lawsuit
* GoPro shares trade above $31 in IPO
* Indexes down: Dow 0.2 pct; S&P 0.2 pct; Nasdaq 0.2 pct (Updates to afternoon, changes byline)
By Caroline Valetkevitch
NEW YORK, June 26 (Reuters) - U.S. stocks dipped on Thursday as a top Federal Reserve official said interest rate increases should come sooner rather than later.
Financial stocks were among the day’s top decliners after New York State’s attorney general filed a securities fraud lawsuit against Barclays, accusing the British bank of giving an unfair edge in the United States to high-frequency trading clients.
U.S.-listed shares of Barclays fell 6.3 percent to $14.72. Other European banks were also hit, with U.S.-listed shares of UBS AG down 2.5 percent at $18.45 and Credit Suisse off 3.4 percent at $28.32.
Exchanges are expected to see a massive spike in volume towards the close Friday, when Russell Investments announces the final reconstitution of its indexes.
“The market is a little bit extended, and we’re at the point where there’s a little bit of rebalancing going on,” said Fred Dickson, chief market strategist, D.A. Davidson & Co, in Lake Oswego, Oregon.
St. Louis Fed President James Bullard, in an interview with Fox Business Network, reiterated his belief that raising rates by the end of the first quarter of 2015 would be appropriate.
He said the U.S. jobless rate will fall below 6 percent and inflation looks likely to rise back to 2 percent later this year, putting the economy closer to normal than most realize. Bullard is non-voting member of the FOMC.
The Dow Jones industrial average fell 30.12 points or 0.18 percent, to 16,837.39, the S&P 500 lost 4.51 points or 0.23 percent, to 1,955.02 and the Nasdaq Composite dropped 9.82 points or 0.22 percent, to 4,369.94.
Shares of the wearable sports camera maker GoPro were up 31.6 percent at $31.58 in their market debut.
Alcoa Inc shares rose 2.6 percent to $14.93. The company agreed to buy aircraft parts maker Firth Rixson from private equity firm Oak Hill Capital Partners for $2.85 billion in cash and stock.
Market reaction was muted to data that showed consumer spending rose less than expected in May, likely held back by weak healthcare spending, which could prompt economists to temper their second-quarter growth estimates.
In a separate report, the Labor Department said new applications for state unemployment benefits slipped 2,000 to a seasonally adjusted 312,000 for the week ended June 21.
Additional reporting by Angela Moon; Editing by Chizu Nomiyama and Nick Zieminski