* Initial jobless claims, producer prices rise
* Citi cuts ratings of three chipmakers
* Indexes: Dow off 0.03 pct, S&P off 0.06 pct, Nasdaq up 0.02 pct
By Chuck Mikolajczak
NEW YORK, Sept 13 (Reuters) - U.S. stocks were little changed on Thursday, ahead of a possible decision on further economic stimulus measures at the conclusion of the Federal Open Market Committee policy meeting later in the day.
The Federal Reserve appears poised to launch a third round of unconventional monetary stimulus, while signaling that a weak economy may warrant ultra-low interest rates for at least another three years. The FOMC announces its decision at about 12:30 p.m. ET (1630 GMT) as the two-day meeting ends.
With the S&P 500 up more than 9 percent since the start of June on expectations global central banks will act to combat slowing growth, some analysts are wondering how much further the index can climb.
"The upside (for stocks) is probably less than the downside - the real question is what is the long-term impact and can we get coordinated fiscal policy and governmental or congressional stimulus in conjunction with the monetary policy," said Jordan Waxman, a managing director at HighTower Advisors in New York.
"Until that time, you might have had a nice bid under certain assets but you don't have a sustainable growth market until you get that coordination."
The dollar fell, hitting a seven-month low against the yen and holding near a four-month low versus the euro, on expectations for more stimulus measures from the Fed.
Economic data showed the number of Americans filing new claims for jobless benefits rose more than expected last week to 382,000, with several states reporting an increase related to Tropical Storm Isaac. Economists polled by Reuters had forecast that claims would rise to 370,000 last week.
Separately, the August producer price index increased 1.7 percent last month, the largest gain since June 2009, as the cost of energy surged, although underlying inflation pressures were contained.
The Dow Jones industrial average dropped 3.92 points, or 0.03 percent, to 13,329.43. The Standard & Poor's 500 Index dropped 0.90 points, or 0.06 percent, to 1,435.66. The Nasdaq Composite Index gained 0.60 points, or 0.02 percent, to 3,114.92.
Pall Corp jumped 7.9 percent to $62.75, the biggest percentage gainer on the S&P 500, after the maker of filtration products reported fourth-quarter earnings that beat Wall Street expectations.
FirstMerit Corp said it would buy Citizens Republic Bancorp in an all-stock transaction valued at about $952 million, to expand its footprint into Michigan and Wisconsin. Citizens shares gained 2.9 percent to $20.45 while FirstMerit dropped 10.1 percent to $15.43.
Semiconductor shares declined after Citigroup cut its rating on several names in the PC supply chain, including Intel Corp , Advanced Micro Devices Inc and Marvell Technology Group Ltd. Intel slipped 0.8 percent to $23, Marvell fell 2 percent to to $10.04 while AMD edged up 0.3 percent to $3.90. The PHLX semiconductor index lost 0.6 percent.
Britain's BAE Systems and Airbus-owner EADS said they are in advanced talks to create an industry giant that would overtake rival Boeing in sales and contend with defense cutbacks in Europe and the United States. Boeing shed 0.6 percent to $70.56.