US STOCKS-Wall St falls on retail data; oil lifts energy shares

* Retail sales rise less than expected in May

* Oil rises on Iraq violence, energy shares higher

* Lululemon falls on results; Restoration Hardware (NYSE: RH - news) up

* Indexes down: Dow 0.2 pct, S&P 0.3 pct, Nasdaq 0.2 pct (Updates to midday trading)

By Ryan Vlastelica

NEW YORK (Frankfurt: HX6.F - news) , June 12 (Reuters) - U.S. stocks fell on Thursday after a round of disappointing economic data on consumers and the labor market, though energy shares were sharply higher as the price of crude oil spiked.

Retail sales rose 0.3 percent in May, half the growth rate that had been forecast, while Americans' new claims for unemployment benefits unexpectedly rose last week.

While both data points were below expectations, neither was seen as so weak as to derail the thesis of improving economic conditions, and the market's recent uptrend is still viewed as intact. Despite a two-day drop in the S&P 500, the benchmark index is less than 1 percent below its record close.

"The market has had a fantastic run and this is just a healthy and routine pause we're in right now. The bull market is old and wrinkly, but nowhere near dead," said Paul Schatz, chief investment officer at Heritage Capital in Woodbridge, Connecticut.

The day's losses were slight but broad, with nine of the 10 primary S&P 500 sectors down on the day. The only exception was energy, which rose 0.7 percent alongside a 1.5 percent rise in U.S. crude futures. Oil hit its highest since September on worries escalating violence in Iraq could disrupt oil supplies from the major OPEC exporter.

The Energy Select Sector SPDR ETF rose 0.7 percent while the PHLX (Shenzhen: 300287.SZ - news) oil service sector rose 0.8 percent. Occidental Petroleum Corp rose 1.7 percent to $101.62.

"Oil spiking isn't a problem right now, since this is strictly a geopolitical response, but if it stays substantially above $115 for a week or two, that's when it will become an issue for consumer spending or the economy at large," Schatz said.

The Dow Jones industrial average fell 41.23 points or 0.24 percent, to 16,802.65, the S&P 500 lost 4.78 points or 0.25 percent, to 1,939.11 and the Nasdaq Composite dropped 9.19 points or 0.21 percent, to 4,322.75.

Geron Corp was one of the Nasdaq's most active movers, jumping 32 percent to $3.42 on heavy volume after the U.S. Food and Drug Administration lifted a partial clinical hold on a study testing its blood cancer drug.

Lululemon Athletica Inc (NasdaqGS: LULU - news) fell 15 percent to $37.62 on heavy volume. The athletic apparel retailer cut its full-year earnings and revenue outlook.

On the upside, Restoration Hardware Holdings Inc surged 14 percent to $81.43 a day after its first-quarter results. (Editing by Chizu Nomiyama and Nick Zieminski)