* U.S. tariff on China tires unnerves investors
* Deutsche Telekom said to eye Sprint Nextel bid
* Indexes: S&P and Nasdaq flat, Dow down 0.1 pct
* For up-to-the-minute market news, click STXNEWS/US (Updates to midday)
By Edward Krudy
NEW YORK, Sept 14 (Reuters) - U.S. stocks were little changed on Monday after the United States imposed special duties on Chinese tires, raising investors' concerns about trade friction between the two economic powers.
The decision by U.S. President Barack Obama could open the door to a host of trade complaints against Chinese products, creating tensions as Western nations seek support from the world's third-largest economy at G20 meetings later this month.
In response, China's commerce ministry said Sunday it launched an anti-dumping investigation into imports of U.S. chicken products and automotive exporters.
"Although on the surface it could lead to something serious, I think both sides, and certainly China, realize that it not in their best interest to really escalate this," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
"China needs the United States to help them through further recovery in the economic downturn as the United States needs China to still finance the growing (public) debt - it's a symbiotic relationship."
The U.S.-China row helped lift shares of U.S. tire makers, with Goodyear Tire & Rubber Co shares up 4.3 percent to $18.02, and Cooper Tire & Rubber Co adding 9.7 percent to $15.98.
The Dow Jones industrial average was down 16.77 points, or 0.17 percent, at 9,588.64. The Standard & Poor's 500 Index was down 0.09 point, or 0.01 percent, at 1,042.64. The Nasdaq Composite Index was down 0.01 point, or 0.00 percent, at 2,080.89.
Stocks showed little immediate reaction to President Barack Obama's speech delivered near Wall Street calling on financial firms not to fight regulatory reform and for Congress to pass his legislative proposals. Obama spoke one year after the collapse of Lehman Brothers sent world financial markets into a tailspin.
The trade news sent the two-stock Dow Jones U.S. tire index up 5 percent but was received with caution by the wider market.
Investors are increasingly wary of stock valuations as the current rally has extended into a sixth month with the S&P 500 up 53 percent since the March 9 low.
The market was "kind of due for a dinging, a little on the overbought side here, so it's only natural for a pullback to take place," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
The session was volatile as stocks traded in a range around break-even. Investors said the expiry of four different types of options on Thursday and Friday, a process known on Wall Street as quadruple witching, could add to volatility this week.
In corporate deal news, Sprint Nextel Corp shares jumped 14 percent to $4.32 after a British newspaper reported that Germany's Deutsche Telekom AG was considering a bid for its U.S. rival.
British confectioner Cadbury Plc reiterated its stance on a takeover bid from Kraft Foods Inc over the weekend as Cadbury's chairman, Roger Carr, said it was an "unappealing prospect" being absorbed into Kraft's low growth conglomerate business model.
Kraft shares rose 0.1 percent to $26.13. (Editing by Kenneth Barry)