US STOCKS-Wall St wilts as oil surges

* 10-year Treasury auction on tap

* Worries over rising oil prices weigh

* Dow off 0.2 pct, S&P 500 off 0.4 pct, Nasdaq off 1 pct

* For up-to-the-minute market news click [STXNEWS/US] (Updates to midday, changes byline)

By Rodrigo Campos

NEW YORK, June 10 (Reuters) - U.S. stocks fell on Wednesday, dragged down by consumer, technology and industrial issues, after oil surged to a 7-month high, triggering worries it may curtail spending.

Gains in the price of oil and other commodities helped to underpin stocks globally on hopes economic activity was picking up. But in the United States, investors worried that higher prices may fuel inflation and hamper a recovery.

"The crude rise is certainly having some impact on sentiment in retail stocks. There is a little bit of skepticism that consumers are going to continue to spend unabated, even with any short-term economic improvement," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

The Dow Jones industrial average .DJI shed 20.33 points, or 0.23 percent, to 8,742.73. The Standard & Poor's 500 Index .SPX lost 3.63 points, or 0.39 percent, to 938.80. The Nasdaq Composite Index .IXIC dropped 17.83 points, or 0.96 percent, to 1,842.30.

IPod maker Apple Inc (AAPL.O) fell 2.7 percent to $138.92 and was the top drag on the Nasdaq, while discount retailer Wal-Mart Stores Inc (WMT.N) shed 0.8 percent to $50.23. The S&P retail index .RLX slipped 0.9 percent.

The drop in the Nasdaq reversed gains on Tuesday, when an upbeat outlook from Texas Instruments Inc (TXN.N) sent semiconductor shares higher.

Results from a key debt auction from the U.S. government are expected at 1 p.m. EDT (1700 GMT), and investors are looking for possible hikes in borrowing costs that could also hurt a recovery.

"I think we're going to need to see some more significant positive economic data points before people become convinced that the market's going to make a move to higher levels," Wedbush's James said.

"One sign today is going to be how well the 10-year auction goes. There'll be a lot of people watching that, and it's going to have an impact on how the market trades later today."

Construction equipment manufacturer Caterpillar Inc (CAT.N) fell 1.4 percent to $37.70 and was among the top drags on the Dow industrials.

Rising shares included energy companies Chevron Corp (CVX.N), up 0.5 percent to $70.56, and Exxon Mobil Corp (XOM.N), up 0.6 percent to $73.53, as U.S. light crude futures CLc1 advanced 1.8 percent to $71.26 per barrel. The S&P energy sector .GSPE gained 0.4 percent.

Home Depot Inc (HD.N) was up 1.5 percent to $24.71, which also limited losses in the blue-chip Dow index. The home improvement retailer said the worst of the housing slump was over and that earnings could be flat this year, rather than falling, as it previously forecast. [ID:nN10426356] (Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)