* Target rallies after outlook, lifting retailers
* Ireland debt woes, China inflation could be headwinds
* Indexes up: Dow 0.1 pct, S&P 0.3 pct, Nasdaq 0.5 pct (Updates to afternoon trade)
By Angela Moon
NEW YORK, Nov 17 (Reuters) - The S&P 500 and Nasdaq indexes rose modestly on Wednesday, led by gains among retailers after a bullish outlook from Target, but Europe's debt crisis kept investors cautious.
Discount chain Target Corp jumped nearly 4 percent to $55.62 after it forecast the upcoming holiday season would be its best same-store sales in three years. The outlook sparked a 1 percent rise in the S&P retail index.
Costco Wholesale Corp, another major retailer, was one of the top percentage gainers on the Nasdaq 100, gaining 1 percent to $66.36.
It was the market's second day of positive news from retailers. Wal-Mart Stores Inc and Home Depot Inc raised their profit forecasts for the year on Tuesday.
But the overall market struggled to rebound from a drop of nearly 2 percent drop on Tuesday as investors kept close eye on the situation in Ireland. The country agreed to work with a European Union-IMF mission on urgent steps to shore up its shattered banking sector.
"The market is struggling to carry the rally, and this could be a sign that we could be headed for a pullback or a correction," said Len Blum, managing partners of Westwood Capital LLC in New York.
The S&P 500 is up 6.5 percent from a year ago.
The Dow Jones industrial average was up 5.95 points, or 0.05 percent, at 11,029.45. The Standard & Poor's 500 Index was up 3.20 points, or 0.27 percent, at 1,181.54. The Nasdaq Composite Index was up 12.15 points, or 0.49 percent, at 2,481.99.
The CBOE Volatility index, Wall Street's so-called fear gauge, declined 5 percent but remained above 20. On Tuesday, it closed at its highest point since Oct. 4, breaking above its 50-day moving average and facing resistance at the 200-day moving average.
Commodity prices fell after the Chinese government said it will take forceful measures to stabilize consumer prices, which is expected to slow demand in the fast-growing economy.
U.S. crude oil futures were down 2 percent at $80.75 per barrel, and shares of aluminum company Alcoa fell 0.8 percent to $12.93.
In the latest U.S. economic data, housing starts slumped to the lowest level in more than a year in October, while consumer prices rose, the annual increase in core CPI was the smallest on record.
General Motors Co set the terms for a landmark initial public offering that could be the largest in U.S. history and raise up to $22.7 billion. The IPO is scheduled to debut on Thursday. (Reporting by Angela Moon; additional reporting by Doris Frankel; Editing by Kenneth Barry)