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* U.S. consumer prices barely rise in May
* Expectations low for Trump-Xi talks, preparations limited
* Trade-sensitive industrials, chipmakers drop
* Mattel jumps on rejecting MGA Entertainment's offer
* Futures off: Dow 0.21%, S&P 0.21%, Nasdaq 0.40% (Updates prices, adds comments)
By Shreyashi Sanyal
June 12 (Reuters) - Wall Street was set to open slightly lower on Wednesday as worries of a protracted U.S.-China trade war was heightened by Washington's tough stance, but losses were limited by tame inflation data that supported the case for an interest rate cut.
Futures pared losses after data showed consumer prices edged up 0.1% in May, in line with expectations of economists polled by Reuters and pointing to moderate inflation.
Excluding the volatile food and energy components, the CPI nudged up 0.1%.[ nLNSCHEF59]
"We're not seeing much signs of creeping inflation, or at least increasing inflation. That's one of the things that gives the Federal Reserve to think about lowering rates later this year," Art Hogan, chief market strategist at National Securities in New York.
"This is a market that would love to see us get back to the negotiating table. The longer these trade tensions last, the most damage it'll do to the economy, and therefore to earnings."
Fresh worries erupted on the trade front after President Donald Trump said he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five major points. This led the blue-chip Dow index to snap a six-day winning streak on Tuesday.
With under three weeks to go before proposed talks between the United States and Chinese leaders, sources say there has been little preparation for a meeting even as the health of the world economy is at stake.
Trump also said that interest rates were "way too high", ahead of a reading on U.S. inflation that could shift the odds towards a cut in rates as soon as July.
Hopes that the Federal Reserve will act to counter a slowing global economy due to escalating trade war have spurred a rally in stocks this month, with the S&P 500 index up about 5% so far in June.
Fed policymakers will meet on June 18-19 and markets have priced in at least two rate cuts by the end of 2019. Fed fund futures imply around an 80% chance of an easing as soon as July.
Meanwhile, concerns of a slowdown in China rose as data showed factory inflation slowed in May and the country reported the worst-ever monthly sales drop.
At 8:50 a.m. ET, Dow e-minis were down 56 points, or 0.21%. S&P 500 e-minis were down 6 points, or 0.21% and Nasdaq 100 e-minis were down 30 points, or 0.4%.
Trade-sensitive Boeing Co dropped 0.5% in premarket trading.
Chipmakers and semiconductor equipment makers, which get a sizeable portion of revenue from China, declined, with Micron Technology Inc, Nvidia Corp and Applied Materials Inc trading down between 1.3% and 2.5%.
Qualcomm Inc dropped 2.5% after smartphone maker LG Electronics Inc and U.S. Federal Trade Commission opposed the chip supplier's efforts to put a sweeping U.S. antitrust decision on hold.
In a bright spot, Mattel Inc jumped 6.4% after the toymaker rejected another merger offer from Bratz doll maker MGA Entertainment Inc. (Reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru; Editing by Arun Koyyur)