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* Energy shares drop as oil prices slide
* Saudi to recover oil supplies sooner than expected - sources
* Home Depot drops after Guggenheim downgrade
* Corning cuts forecast for display volumes; shares fall
* Dow off 0.08%, S&P up 0.07%, Nasdaq 0.08% higher (Updates prices, adds details)
By Medha Singh
Sept 17 (Reuters) - U.S. stocks were little changed on Tuesday as investors moved to the sidelines ahead of the Federal Reserve's two-day policy meeting, while the impact of weekend attacks on Saudi Arabia's biggest oil refinery faded.
Equity markets took a hit on Monday as the attacks wiped out half of Saudi Arabia's oil production, sending oil prices soaring, while fuelling geopolitical tensions.
But President Donald Trump's statement that he does not want war and a Reuters report that Saudi Arabia was close to restoring 70% of the oil production lost calmed investor nerves.
The benchmark S&P 500 index recovered early losses to rise slightly, with the so-called defensive consumer staples , utilities and real estate sectors posting the biggest gains.
The energy index tracked a drop in oil prices, after recording its best one-day surge since January on Monday.
The U.S. central bank concludes its policy meeting on Wednesday, with traders currently expecting a 63.5% chance of a quarter percentage point cut from the Fed this week, down from 88.8% on Friday, according to CME's FedWatch.
"It's just typical trading on the vigil of a Fed meeting," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"We haven't seen any panic from what happened over the weekend. I think (the Fed) will stick with a quarter of a percentage point cut even after the Saudi attack."
Banks, which tend to underperform in a lower interest rate environment, fell 0.95% and were the biggest drag on the S&P 500.
Since the last interest rate cut in July, U.S. economic data has shown mixed signals about the domestic economy. While strong retail sales and wage growth have bolstered consumer confidence, a protracted U.S.-China trade war has weighed on manufacturing and business sentiment.
Latest data showed U.S. manufacturing output increased more than expected in August, rebounding from a drop in July, while homebuilders' optimism grew unexpectedly brighter in September.
At 11:41 a.m. ET, the Dow Jones Industrial Average was down 22.68 points, or 0.08%, at 27,054.14, the S&P 500 was up 1.95 points, or 0.07%, at 2,999.91. The Nasdaq Composite was up 6.66 points, or 0.08%, at 8,160.21.
Among stocks, Chipotle Mexican Grill Inc rose 3.3% as it added a new steak dish to its menu in the United States for the first time in three years.
Home Depot Inc dropped 1.2% after Guggenheim downgraded the home improvement chain's shares to "neutral" from "buy".
Corning Inc tumbled 8.2% as the Gorilla glass maker cut its current-quarter display volume forecast.
Kraft Heinz Co slipped 3.7% after the packaged food maker's second-largest investor, 3G Capital, sold over 25 million shares in open market at a discount.
Declining issues outnumbered advancers for a 1.06-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and one new low, while the Nasdaq recorded 36 new highs and 13 new lows. (Reporting by Medha Singh and Shreyashi Sanyal in Bengaluru; Editing by Anil D'Silva)