US STOCKS-Data buoys Wall Street ahead of Fed minutes

* Consumer spending up, inflation subdued

* J.C. Penney shares jump after results

* Priceline stock up on Goldman bullish view

* Dow flat, S&P up 0.1 pct, Nasdaq up 0.1 pct

By Rodrigo Campos

NEW YORK, Nov 20 (Reuters) - U.S. stocks edged modestly higher in early trading Wednesday after data on spending and inflation gave the Federal Reserve room to continue its market-friendly economic stimulus.

U.S. consumer spending rose more than expected in October and consumer prices unexpectedly fell, while the annual inflation rate was the lowest in four years, reports showed.

Minutes from the most recent Fed policy-setting meeting, due at 2:00 p.m. EST (Other OTC: ECPCY - news) (1900 GMT), will be scrutinized for further clues on the future of a policy that has put the S&P 500 on track to post its best year in a decade.

"Strength in the economy and subdued inflation pressures mean the Fed doesn't have to rush to reduce its stimulus," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

"There's been talk that tapering is coming soon, maybe this takes some pressure off. The data bodes well for the holiday shopping season as well," he said.

The Dow Jones industrial average rose 1.92 points, or 0.01 percent, to 15,968.95, the S&P 500 gained 1.75 points, or 0.1 percent, to 1,789.62 and the Nasdaq Composite added 3.723 points, or 0.09 percent, to 3,935.276.

The Dow industrials has traded above 16,000 over the last couple of sessions but failed to close above that level, while the S&P faces resistance at 1,800. A solid move above those levels could further attract investors and money managers eager to chase performance.

Separate data showed business inventories grew more than expected in September, suggesting the government's third-quarter growth estimate could be revised higher, while home resales fell more than expected last month.

Fed Chairman Ben Bernanke, in a speech late Tuesday that echoed dovish comments by his nominated successor, Janet Yellen, said the U.S. central bank will maintain its ultra-easy monetary policy for as long as needed. The policy has been a pillar of the current rally in equities.

A Reuters poll published before Wednesday's data showed economists expected the Fed to begin reducing its $85 billion in monthly bond purchases by March, with a small chance it could do so as early as January.

Deere & Co (Frankfurt: DCO.F - news) reported higher-than-expected fourth-quarter profit and forecast 2014 earnings above estimates. Its shares gained 3 percent to $85.28.

Shares of home improvement chain Lowe's fell 4.2 percent to $48.30 after it reported slightly lower-than-expected quarterly earnings and gave a disappointing outlook for the year. The results underscored Lowe's struggle to catch up with market leader, Home Depot (TLO: HD-U.TI - news) .

J.C. Penney gained 7.7 percent to $9.38 after it reported a deeper net loss but said sales were "encouraging" in November so far.

Priceline rose 3.4 percent to $1,156.78 after Goldman Sachs (NYSE: GS-PB - news) added the stock to its "conviction buy" list.