* Dudley sees Fed rate hikes as U.S. inflation weakness fades
* Safe havens up after North Korea foreign minister's comments
* Nasdaq on track for worst percentage loss since Aug. 17
* Indexes down: Dow 0.41 pct, S&P 0.41 pct, Nasdaq 1.13 pct (Updates price, adds quote)
By Sruthi Shankar
Sept 25 (Reuters) - A sharp selloff in technology stocks dragged down the Nasdaq by more than 1 percent on Monday, with North Korea's latest warnings to Washington adding to the downbeat mood.
North Korea's foreign minister said President Donald Trump had declared war on the country and that it reserves the right to take countermeasures, including shooting down U.S. bombers even if they are not in its airspace.
The comments pushed up demand for safe-haven assets, with gold rising 0.9 percent.
"We're certainly in a heated-up time frame," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
The CBOE Volatility index, a widely followed measure of market anxiety, gained 1.18 points to hit a 2-week high of 10.76.
The high-flying stocks of Facebook, Amazon, Apple, Netflix and Alphabet were down between 1 percent and 5 percent, dragging down the major indexes.
"I think we're seeing more of a rotation out of some hot-flying tech names into small-caps, some of the names that may well benefit from tax cuts," Hogan added.
The S&P technology index slid 1.75 percent. The index, however, has climbed 22.6 percent so far this year, far outperforming the 11.3 percent gains in the broader S&P index.
However, the energy index's 1.47 percent rise helped offset some losses.
Oil hit a more than two-year high after major producers said the market was on its way towards rebalancing, while Turkey threatened to cut oil flows from Iraq's Kurdistan region toward its ports.
At 12:32 p.m. ET (1632 GMT), the Dow Jones Industrial Average was down 92.33 points, or 0.41 percent, at 22,257.26 and the S&P 500 was down 10.22 points, or 0.41 percent, at 2,492.
The Nasdaq Composite was down 72.76 points, or 1.13 percent, at 6,354.16 - on track for its worst single-day percentage loss since Aug. 17.
New York Federal Reserve President William Dudley's upbeat comments on the economy reinforced the central bank's view of gradual rate hikes.
Investors are also awaiting a speech by Fed Chief Janet Yellen on Tuesday for more guidance on the monetary policy.
General Motors rose 2.05 percent after Deutsche Bank upgraded the automaker's stock to "buy".
Allergan was up 3 percent after the drugmaker authorized a $2 billion buyback of its shares and said its chief financial officer would retire.
Declining issues outnumbered advancers on the NYSE by 1,442 to 1,369. On the Nasdaq, 1,741 issues fell and 1,071 advanced. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)