* Initial claims in line with expectations
* Lenders fail to reach deal for Greece
* Indexes: Dow up 0.14 pct, S&P off 0.02 pct, Nasdaq flat
By Chuck Mikolajczak
NEW YORK, Nov 21 U.S. stocks were flat on Wednesday as consumer sentiment stalled because of growing uncertainty over federal tax and spending plans next year and the absence of a deal by international lenders on emergency aid for Greece
Other U.S. economic data came in as expected, such as initial weekly claims for jobless benefits, depriving the market of any clear direction.
Euro zone finance ministers, the International Monetary Fund and the European Central Bank failed for a second week to agree on how to make Greece's debt sustainable, which is necessary before the next cash infusion can be made to the fiscally beleaguered nation.
European shares edged up as investors looked for signs of progress on a deal before the next meeting of lenders on Monday. The FTSEurofirst 300 gained 0.2 percent.
"The European situation has been around for so long, there is nothing new there and everybody realizes it is going to be a long-term workout. From some progress over the last couple of months, all of a sudden we've had no progress," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
Labor Department data showed initial jobless claims dropped 41,000 to a seasonally adjusted 410,000 in the latest week, in line with expectations though still elevated in the wake of superstorm Sandy.
The S&P 500 had dropped 5.3 percent since Election Day on Nov. 6 because of worries over U.S. fiscal negotiations and continued debt problems in Europe. But over the past three session, the index has risen 2.6 percent, boosted by positive rhetoric from Washington on fiscal discussions and a market many viewed as oversold.
Gains made early in the day on Tuesday were mostly erased after Federal Reserve Chairman Ben Bernanke cautioned that the central bank lacked the tools to cushion the U.S. economy from the impact of the "fiscal cliff."
"We are in a bit of a holding period here. Everybody is focused on the fiscal cliff and any indications of a settlement between Congress and the White house and any indications of what that settlement might be," said Ghriskey.
The fiscal cliff is a series of tax hikes and spending cuts which, failing agreement in Congress, will go into effect in the new year and threaten the nation's fragile economic recovery.
The Dow Jones industrial average gained 18.46 points, or 0.14 percent, to 12,806.97. The Standard & Poor's 500 Index shed 0.33 points, or 0.02 percent, to 1,387.48. The Nasdaq Composite Index lost 0.09 points, or 0.00 percent, to 2,916.59.
Financial information firm Markit said its U.S. "flash," or preliminary, manufacturing Purchasing Managers Index rose to 52.4, its quickest pace in five months, from a three-year low of 51.0 in October.
The Thomson Reuters/University of Michigan's final reading of the overall index on consumer sentiment came in at 82.7, a touch up from 82.6 the month before but down from a preliminary reading of 84.9 released earlier in the month.
Trading is expected to be light ahead of a U.S. holiday Thursday for Thanksgiving.
Deere & Co lost 2.7 percent to $83.66 after the world's largest farm equipment maker, reported a weaker-than-expected quarterly profit.
Salesforce.com Inc jumped 7.3 percent to $156.52 after the business software provider beat Wall Street expectations for the third quarter and maintained its outlook for the rest of the year.