US STOCKS-Retailers lift S&P, Nasdaq, but Europe weighs

* Target rallies after rosy outlook, lifting retailers

* Ireland debt woes, China inflation limit gains

* Indexes: Dow flat, S&P up 0.2 pct, Nasdaq up 0.6 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to mid-afternoon trade, adds quote)

By Angela Moon

NEW YORK, Nov 17 (Reuters) - The S&P 500 and Nasdaq indexes were modestly higher 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 its best same-store sales in three years during the upcoming holiday season. The outlook sparked a 1 percent rise in the S&P retail index <.RLX>. For details, see [ID:nN17185995]

Costco Wholesale Corp , another major retailer, was one of the top percentage gainers on the Nasdaq 100 <.NDX>, rising 2 percent to $67.04. [ID:nN17187289]

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 on Tuesday as investors kept a close eye on the situation in Ireland. Dublin agreed to work with a European Union-International Monetary Fund mission on urgent steps to shore up its shattered banking sector. [ID:nLDE6AG004]

"I think the market is in a deterioration trend. It's worrisome at this point, considering that we had a selloff yesterday with pretty big volume and poor advance-decline numbers," said Frank Gretz, market analyst and technician at the Shields & Co brokerage in New York.

"The market is certainly vulnerable, and I think it is in fact headed for a correction."

The Dow Jones industrial average <.DJI> was down 0.03 points, or 0.00 percent, at 11,023.47. The Standard & Poor's 500 Index <.SPX> was up 2.48 points, or 0.21 percent, at 1,180.82. The Nasdaq Composite Index <.IXIC> was up 13.91 points, or 0.56 percent, at 2,483.75.

The S&P 500 is up 6.5 percent from a year ago.

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 2.6 percent at $80.17 per barrel, and shares of aluminum producer Alcoa Inc fell 0.8 percent to $12.93, weighing on the Dow. [ID:nTOE6AG067]

The CBOE Volatility index <.VIX>, Wall Street's so-called fear gauge, declined 4.7 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.

In the latest U.S. economic data, housing starts slumped to their lowest level in more than a year in October, while consumer prices rose, but the annual increase in core CPI was the smallest on record. [ID:nN17190977]

General Motors Co [GM.UL] 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. [ID:nN17165039] (Reporting by Angela Moon; additional reporting by Doris Frankel; editing by Kenneth Barry and Jeffrey Benkoe)