RPT-Wall St Week Ahead: Housing, CPI may feed recovery hopes

(Repeating column initially transmitted late Friday)

By Caroline Valetkevitch

NEW YORK, June 14 (Reuters) - Stock investors will watch housing starts, CPI and other data this week for signs that hopes for economic recovery will not turn out to be false.

If recent weeks' activity is any indication, stocks may stay in a narrow trading range, as recovery hopes have been met with concern about an uncertain job market, rising gasoline prices and higher borrowing costs.

The three major U.S. stock indexes ended just slightly higher for the past week, even though the Dow Jones industrial average .DJI broke into positive territory for the year for the first time since early January.

"We've been in a slow, upward drifting trading range," said Fred Dickson, a market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. "Investors are going to be looking to see ... if the green shoots in the economy have sprouted a little bit further or are languishing, waiting for some more water."

The benchmark S&P 500 .SPX is up 39.86 percent since the 12-year closing low of March 9, and investors have been eager for more definitive signs that the recovery is going to be strong enough to sustain a rebound in corporate profits, which probably would underpin stronger gains in the market.

Besides data on construction of new housing, which has been among the weakest parts of the economy, investors will scrutinize readings on inflation at the wholesale and consumer level, when the Producer Price Index and the Consumer Price Index for May are released this week. Wall Street also will note the numbers on industrial production and capacity utilization as well as weekly initial jobless claims.

With oil prices back above $70 a barrel, inflation worries could hinder the Federal Reserve's efforts to end the recession, pushing up interest rates and delaying any recovery.