(Corrects in 5th graf to show markets were supported by weak dollar)
* Banks fall on joint mortgage probe concerns
* Initial claims, PPI rise more than expected
* Indexes: Dow up 0.1 pct, S&P flat, Nasdaq up 0.1 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates to early trading)
By Chuck Mikolajczak
NEW YORK, Oct 14 (Reuters) - U.S. stocks were little changed on Thursday, but bank stocks fell on concerns over a nationwide probe into the mortgage industry.
The KBW bank index <.BKX> tumbled 2.2 percent on increasing worries that a joint investigation into home foreclosure procedures by attorneys general from all 50 U.S. states would cause uncertainty and threaten the recovery of the fragile housing market.
Bank of America Corp
"There are more concerns about litigation and the consortium of attorney generals," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
Markets were supported by another slide in the dollar, which fell to a 2010 low against a basket of major currencies. The prospect of additional Fed stimulus has created an inverse correlation between the dollar and equities, with a decline in the greenback sparking a move into equities. [ID:nN14110553]
The Dow Jones industrial average <.DJI> gained 9.12 points, or 0.08 percent, to 11,105.20. The Standard & Poor's 500 Index <.SPX> added 0.21 points, or 0.02 percent, to 1,178.31. The Nasdaq Composite Index <.IXIC> rose 3.25 points, or 0.13 percent, to 2,444.48.
After an 11.9 percent rise in the benchmark S&P 500 since Sept. 1, short-term momentum indicators have begun to show overbought conditions.
The rally has also brought out some broad bearish bets in the options market. Trading in index ETFs was above normal Wednesday, with 3.88 million puts and 2.90 million calls changing hands across all products.
Investors also took in the latest government data showing new claims for unemployment insurance rose more than expected in the latest week, while rising food and energy prices pushed inflation at the wholesale level up twice as fast as forecast last month. [ID:nN14277059] (Additional reporting by Doris Frankel; editing by Jeffrey Benkoe)