* Consumer price index up 0.1 pct in July vs est 0.2 pct
* S&P set for biggest weekly fall in more than four months
* J.C. Penney, Snap plunge to record lows on weak results
* Indexes up: Dow 0.06 pct, S&P 0.1 pct, Nasdaq 0.54 pct (Updates to late afternoon, adds commentary, changes byline)
By Sinead Carew
Aug 11 (Reuters) - The three major U.S. stocks indexes were on track to snap a three-day losing streak on Friday, as investors bet that tepid inflation data would stunt U.S. rate hikes, even as the United States and North Korea stepped up an aggressive war of words.
Weaker-than-expected July consumer price data pointed to benign inflation that could cause the Federal Reserve to hold off from raising rates again this year.
This gave investors some hope at the end of a jittery week, which could show the S&P's biggest weekly loss in more than four months, primarily due to a continuous exchange of threats between the United States and North Korea.
President Donald Trump told North Korea on Friday that the U.S. military was "locked and loaded," while Pyongyang accused him of driving the Korean peninsula to the brink of nuclear war.
After hurrying to sell off richly-valued stocks this week, investors appeared to be reassessing the geopolitical risks, according to Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
He said it is "a bullish sign that the equity markets are rebounding somewhat on a Friday, in spite of the fact that investors will need to wait for two days to react to any geopolitical news that comes out over the weekend."
The Dow Jones Industrial Average was up 13.21 points, or 0.06 percent, to 21,857.22, the S&P 500 gained 2.38 points, or 0.10 percent, to 2,440.59 and the Nasdaq Composite added 33.77 points, or 0.54 percent, to 6,250.64.
Phipps said investors were reassured after Dallas Fed President Rob Kaplan's said on Friday that the Fed needs more evidence of progress toward its inflation goal before raising rates again.
"If earnings can stay strong and interest rates remain low investors can look beyond North Korea and continue to rally equities," said Phipps.
Traders saw the chance of a rate hike in December falling to 40 percent from 42 percent before Friday's data, according to Federal funds futures.
Nearly $1 trillion has been wiped out from global equity markets since Trump's promise on Tuesday to unleash "fire and fury" on North Korea if it threatens the United States.
However, the S&P was still not far off record levels. It has fallen more than 1 percent on only three days this year.
Six of the 11 major S&P sectors were higher, with technology's 0.80-percent rise leading the advancers.
But the S&P Bank sub-sector fell 0.7 percent on dimming prospects of another rate hike this year since higher rates tend to boost bank profits.
Investors were also hesitant about buying smaller companies as the Russell 2000 index was down 0.05 percent on Friday, and was more than 5 percent off its July 25 record close.
Shares of Snap were down almost 12 percent after hitting an all-time low following a miss on revenue and daily active users. At least 12 brokerages cut their price targets on the stock.
J.C. Penney was down 17 percent after hitting a record low following the retailer's bigger-than-expected quarterly loss.
Advancing issues were about even with declining ones on both the NYSE and on Nasdaq. (Additional reporting by Sruthi Shankar and Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila and Nick Zieminski)