US STOCKS-Wall St slips on weak economic data

* GDP revised to show economy contracted in Q1

* Consumer sentiment, PMI fall in May

* Humana (NYSE: HUM - news) hits record on takeover interest, insurers gain

* Altera (NasdaqGS: ALTR - news) hits 15-year high on report on Intel (Swiss: INTC.SW - news) interest

* Indexes down: Dow 0.36 pct, S&P 0.24 pct, Nasdaq 0.11 pct (Updates prices)

By Sweta Singh

May 29 (Reuters) - U.S. stocks were lower in early afternoon trading on Friday, weighed by data that showed the economy contracted in the first quarter and as weak data for May added to concerns about the strength of a recovery.

The economy contracted at a 0.7 percent annual rate in the quarter, a sharp turnaround from an earlier estimate of growth of 0.2 percent.

Weak data on factory activity in the Midwest and consumer sentiment for May, suggested that the growth pace was modest early in the second quarter. That mirrored other recent soft data on retail sales and industrial production.

The economy appears poised for its worst first-half performance since 2011.

"The data is telling us that the economy is improving but it is not super strong," said Kim Forrest, a senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The pace of the recovery will add to investor's concerns about the timing of an increase in interest rates by the Federal Reserve.

"Today's market action says the rate increase is going to happen in September," Forrest added.

Adam Sarhan, chief executive of Sarhan Capital in New York, however, ruled out the threat of an imminent interest rate increase, which should be supportive of stocks.

"There is no need for the Fed to raise rates now. The economy simply is not strong enough and that's what today's data tells us," Sarhan said.

The GDP report also showed that corporate profits declined 8.7 percent in the first quarter, the largest drop in a year.

Conflicting reports on Greece's ability to strike a deal with its euro zone partners also weighed on global markets.

At 13:44 p.m. ET (1744 GMT) the Dow Jones industrial average was down 64.96 points, or 0.36 percent, at 18,061.16, the S&P 500 was down 5.09 points, or 0.24 percent, at 2,115.7 and the Nasdaq Composite was down 5.80 points, or 0.11 percent, at 5,092.17.

Eight of the 10 S&P 500 sectors were down. The biggest drop was the industrial sector's 0.71 percent, with United (Shenzhen: 000925.SZ - news) Rental's 6.5 percent fall to $88.85 leading the losers after Bank of America Merrill Lynch downgraded the stock.

Humana jumped as much as 18 percent to hit a record of $210.65 after the Wall Street Journal reported that the health insurer had received takeover interest. Other health insurers also rose.

Intel was up 1.4 percent to $34.49 after the New (KOSDAQ: 160550.KQ - news) York Post reported that it was close to buying Altera for about $15 billion. Altera rose as much as 6.1 percent to a more than 15-year high of $50.10.

ITT Educational Services (NYSE: ESI - news) more than doubled to $4.85 after the for-profit education provider reported higher-than-expected annual results.

Decliners outnumbered advancers on the NYSE by 1,924 to 1,033, for a 1.86-to-1 ratio on the downside. On the Nasdaq, 1,449 issues fell and 1,200 advanced for a 1.21-to-1 ratio favoring decliners.

The S&P 500 index showed 14 new 52-week highs and seven new lows, while the Nasdaq recorded 64 new highs and 26 new lows. (Additional reporting by Sayantani Ghosh in Bengaluru; Editing by Savio D'Souza)