* Consumer price index up 0.1 pct in July vs est 0.2 pct
* S&P on track to post biggest weekly fall in about 5 months
* J.C. Penney, Snap plunge to record lows on weak results
* Indexes up: Dow 0.23 pct, S&P 0.28 pct, Nasdaq 0.62 pct (Updates to early afternoon)
By Sruthi Shankar and Tanya Agrawal
Aug 11 (Reuters) - U.S. stocks indexes were higher in afternoon trading on Friday, on track to snap a three-day losing streak, as tepid inflation data brought back investors to riskier assets, despite heightened tensions between the United States and North Korea.
The weaker-than-expected consumer price data in July, which pointed to benign inflation, could cause the Federal Reserve to hold off from raising rates again this year.
The S&P was, however, on track to post its biggest weekly loss in about five months and the Dow on course to record its biggest weekly fall in nearly four months.
"The market is trying to interpret the CPI data as somewhat positive because it is anticipating that the Fed will be on hold not only in September but also possibly in December," said Robert Pavlik, chief market strategist at Boston Private Wealth.
"It clears the field of another possible issue and with that you start to see a little bit of short covering going on."
Traders saw the chance of a rate hike in December fall to 40 percent from 42 percent shortly before the release of the data, according to Federal funds futures.
Nearly $1 trillion has been wiped out from global equity markets since tensions were sparked off by Trump's "fire and fury" comments on Tuesday.
In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".
At 12:43 p.m. ET (1643 GMT), the Dow Jones Industrial Average was up 49.69 points, or 0.23 percent, at 21,893.7 and the S&P 500 was up 6.84 points, or 0.28 percent, at 2,445.05.
The Nasdaq Composite was up 38.25 points, or 0.62 percent, at 6,255.12.
The U.S. equity market is hovering near record levels and volume has been tepid following the onset of summer. The S&P has lost more than 1 percent on only three days this year.
Five of the 11 major S&P sectors were higher, with the technology's 0.80 percent rise leading the advancers.
However, bank stocks, including Goldman Sachs, Bank of America and Morgan Stanley, were down about 1 percent on the dimming prospects of another rate hike this year.
Shares of Snap were down as much as 14.23 percent and hit an all-time low following a miss on revenue and daily active users. At least 12 brokerages cut their price targets on the stock.
J.C. Penney slumped as much as 18.25 percent to a record low after the retailer reported a bigger-than-expected quarterly loss.
Advancing issues outnumbered decliners on the NYSE by 1,463 to 1,386. On the Nasdaq, 1,440 issues fell and 1,386 advanced. (Reporting by Sruthi Shankar and Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila)