* Most Fed policymakers say rate rise likely needed "soon"
* Tiffany dazzles as turnaround plan takes hold
* Dow up 0.2 pct, S&P up 0.3 pct, Nasdaq up 0.6 pct (Updates to close)
By Caroline Valetkevitch
NEW YORK, May 23 (Reuters) - U.S. stocks ended with small gains on Wednesday after minutes from the Federal Reserve's latest meeting suggested higher inflation may not result in faster interest rate hikes.
Most Fed policymakers thought it likely another rate increase would be warranted "soon" if the U.S. economic outlook remains intact, and many participants saw little evidence of general overheating of the labor market, minutes of the central bank's last policy meeting showed.
Stocks turned higher after the news, with rate-sensitive S&P 500 utilities and real estate ending the day with the biggest percentage gains. Financials, which benefit from a rising rate environment, ended the day down 0.6 percent.
"The market is probably breathing a little bit of a sigh of relief knowing that inflation even a bit above 2 percent may not necessarily mean a faster rate of increases," said Mike Baele, managing director at U.S. Bank Private Client Wealth Management in Portland, Oregon.
The central bank has lifted borrowing costs once so far this year, in March, and policymakers are currently about evenly split between those who expect two more rate rises this year and those who anticipate three. Investors overwhelmingly expect a rate rise at the next meeting on June 12-13.
The Dow Jones Industrial Average rose 52.4 points, or 0.21 percent, to 24,886.81, the S&P 500 gained 8.85 points, or 0.32 percent, to 2,733.29 and the Nasdaq Composite added 47.50 points, or 0.64 percent, to 7,425.96.
Earlier in the day, comments by U.S. President Donald Trump that fueled further skepticism over trade talks between the United States and China weighed on the market.
Trump had signaled a new direction for the trade talks, saying the current track appeared "too hard to get done," a day after telling reporters that he was not pleased with the recent talks.
Retailers were mixed, with Target sinking 5.7 percent after the retailer's quarterly profit rose less than expected as price cuts, higher wages and investments into its online business dented margins.
Tiffany surged 23.3 percent after the jeweler's quarterly results blew past estimates and the company raised its full-year profit forecast and announced a $1 billion buyback program.
Ralph Lauren also soared, ending up 14.3 percent after the company's higher margins helped deliver a solid profit that beat analysts' estimates.
Also, Lowe's gained 10.4 percent after the home improvement retailer maintained its annual financial targets and billionaire investor Bill Ackman said his hedge fund had taken a roughly $1 billion stake in the company.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.07-to-1 ratio; on Nasdaq, a 1.15-to-1 ratio favored advancers.
The S&P 500 posted nine new 52-week highs and three new lows; the Nasdaq Composite recorded 82 new highs and 42 new lows.
About 6.4 billion shares changed hands on U.S. exchanges. That compared with the 6.6 billion-share daily average for the past 20 trading days, according to Thomson Reuters data. (Additional reporting by Chuck Mikolajczak in New York and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila, Nick Zieminski and Jonathan Oatis)