* Threat of imminent action against Syria recedes
* U.S. consumer spending barely rises, inflation weak
* Salesforce.com jumps after results, outlook
* Indexes down: Dow 0.3 pct; S&P 0.3 pct; Nasdaq 0.7 pct
By Angela Moon
NEW YORK, Aug 30 (Reuters) - U.S. stocks fell on Friday, setting the S&P 500 index on track for the biggest monthly drop in over a year, as investors positioned themselves before a long holiday weekend with an uncertain Syrian situation.
Even though the threat of an imminent western military strike on Syria faded slightly, volatility increased. U.S. markets will be closed on Monday for the Labor Day holiday.
"Investors are facing a long weekend with uncertainty on what might happen with Syria, and it's not surprising to see stocks down, bond yields down but volatility higher," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
The CBOE Volatility index VIX, Wall Street's so-called fear gauge, rose 3.2 percent to 17.35.
The benchmark S&P 500 stock index is down 1.7 percent for the week and is down 3.0 percent for the month, putting it on pace for its worst performance since May 2012.
U.S.-led efforts to punish Damascus for the use of chemical weapons against civilians were dealt a blow when Britain said it would not join any military action after the government lost a parliamentary vote on the issue.
However, U.S. Defense Secretary Chuck Hagel said even after the rejection of military action by Britain, the U.S. will continue to seek an international coalition to act on Syria and France said it still backed action.
A U.S. official said the White House plans on Friday to release an unclassified version of an intelligence assessment of a chemical weapons attack last week in Syria.
Weak data on individual spending and tame inflation painted a picture of a soft economy, keeping investors guessing when the Federal Reserve might start to cut back on stimulus measures.
Consumer spending rose only 0.1 percent and inflation was tame in July, with a price index for consumer spending up 0.1 percent.
Other data showed the pace of business activity in the U.S. Midwest increased in August, as the Institute for Supply Management-Chicago business barometer rose to 53.0 from 52.3 in July, matching economists' expectations.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment slipped to 82.1 in August from 85.1 in July, but managed to top economists' expectations for a final read of 80.5.
The Dow Jones industrial average was down 40.14 points, or 0.27 percent, at 14,800.81. The Standard & Poor's 500 Index was down 4.72 points, or 0.29 percent, at 1,633.45. The Nasdaq Composite Index was down 23.88 points, or 0.66 percent, at 3,596.42.
General Electric Co shares rose 0.3 percent to $23.19 after the Wall Street Journal reported the conglomerate plans to spin off the U.S. consumer lending operations of its finance arm GE Capital.
Salesforce.com Inc jumped 14.3 percent to $49.87 and was the best performer in the S&P500 index after the company raised its fiscal 2014 sales outlook after reporting better-than-expected revenue and earnings.
Apache Corp climbed 7.5 percent to $84.54 after the oil and gas producer said it was selling a 33 percent stake in its Egypt oil and gas business for $3.1 billion to state-owned Chinese oil giant Sinopec Group.
Omnivision Technologies Inc tumbled 15.6 percent to $15.53 after the chipmaker forecast current-quarter adjusted profit largely below expectations as rising competition and a slowdown of U.S. smartphone sales led to an inventory pile-up.