WRAPUP 3-U.S. producer prices tame but gain in core vexes

(Updates with closing market levels)

* 12-month core producer price gain is biggest since 1991

* April PPI up 0.2 percent, core up 0.4 percent

* Bigger-than-expected core price gain hits stocks

* Spike in pipeline inflation problem for Fed

By Alister Bull

WASHINGTON, May 20 (Reuters) - U.S producer prices excluding energy and food rose at their fastest pace since 1991 in the year to April, highlighting inflation concerns that may limit the Federal Reserve's options to support a weak economy.

The Fed -- the U.S. central bank -- has been counting on slower growth to stop soaring fuel and food costs spilling into wider inflation but data released on Tuesday on prices paid at the farm and factory gate suggest that battle is not yet won.

The Labor Department said the Producer Price Index rose 0.2 percent last month as food prices took a respite from their march upward and as gasoline costs, which usually climb sharply in April, fell after adjustment for seasonal swings.