US STOCKS-S&P 500 drifts near flat as earnings worries weigh

* 3M falls after RBC downgrade, weighs on industrials

* BASF profit warning drags on U.S. chemical companies

* Dow down 0.3%, S&P 500 off 0.09%, Nasdaq up 0.3% (Updates to late afternoon)

By Caroline Valetkevitch

NEW YORK, July 9 (Reuters) - U.S. stocks were near flat on Tuesday as gains in internet shares were offset by fresh warnings from companies about the impact of the U.S.-China trade dispute on earnings.

In the latest indication of the trade war hurting businesses, German chemicals giant BASF forecast a 30% fall in its adjusted annual profit, and the S&P 500 chemical companies' index fell 1.2%.

Adding to the downbeat mood, RBC Capital Markets downgraded 3M Co to "sector perform," citing macro pressures from China, auto and electronics sectors. The industrial conglomerate's shares fell 2.4% and pulled the S&P industrial index down 0.5%.

The second-quarter earnings season is expected to kick off next week, with analysts forecasting profits at S&P 500 companies to have fallen 0.2% from a year earlier, according to Refinitiv IBES data.

Investors also braced for remarks this week from Federal Reserve Chairman Jerome Powell during his two-day testimony before Congress, which starts on Wednesday. Also due on Wednesday is the central bank's June policy meeting minutes.

Wall Street's main indexes have retreated from their record closing highs after a robust June jobs report on Friday tempered expectations of an aggressive 50-basis-point interest rate cut by the Fed.

"There may be some clarity coming out in the next couple of days based on what Powell says at these hearings," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The 10-year (Treasury) yield has just plummeted," he said. "With flatter earnings coming into the third quarter, we've seen the PE multiple expansion courtesy of these lower rates."

The Dow Jones Industrial Average fell 80.98 points, or 0.3%, to 26,725.16, the S&P 500 lost 2.77 points, or 0.09%, to 2,973.18 and the Nasdaq Composite added 27.72 points, or 0.34%, to 8,126.10.

On the trade war front, the United States and China are set to relaunch trade talks this week after a two-month hiatus. White House economic adviser Larry Kudlow said discussions with the European Union on a trade pact were also progressing.

Gains in Amazon.com, Facebook Inc and Netflix kept the Nasdaq in positive territory.

Netflix rose 0.9% after Cowen and Co said the video streaming services provider would benefit from high viewership for the recently released third series of its original show "Stranger Things".

Declining issues outnumbered advancing ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored decliners.

The S&P 500 posted 20 new 52-week highs and no new lows; the Nasdaq Composite recorded 49 new highs and 43 new lows. (Additional reporting by Medha Singh and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila and Jonathan Oatis)