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US STOCKS-Wall St slides on default worries as debt ceiling talks drag on

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Citigroup drops on IPO plans for Mexico retail unit

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Agilent falls on annual forecast cut

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Indexes down: Dow 0.64%, S&P 0.74%, Nasdaq 0.73%

(Updates prices throughout to open; adds details on fresh round of debt ceiling talks, shares of Citi)

By Shreyashi Sanyal and Shristi Achar A

May 24 (Reuters) - Wall Street indexes slipped on Wednesday as talks between the White House and Republican representatives on raising the debt ceiling dragged on, stoking worries about an unprecedented government default.

Lack of clear signs of progress in negotiations over increasing the $31.4 trillion borrowing limit ahead of the June 1 deadline has dented investor sentiment as several rounds of talks have been inconclusive.

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All the 11 major S&P 500 sector indexes fell in the first hour of trading, with economy-focused financials, materials and industrials down 1% each.

"As we get closer to what the perceived deadline of the U.S. running out of cash, markets are going to get way more nervous if the standoff continues," said Jamie Cox, managing partner at Harris Financial Group.

Investors also await minutes from the Federal Reserve's May 2-3 meeting, due later in the day, to assess the central bank's interest-rate path.

"We're at this inflection point where there's going to be disagreement at the FOMC, and you should probably start to see that show up in the minutes," Cox said, adding that policymakers may be torn between fighting inflation and its impact on the economy following the banking crisis.

The Fed had hiked interest rates by 25 basis points in its May meeting.

Shorter-dated Treasury yields continued to rise, with yields on the 1-month bond hitting another record high at 5.8920%.

At 10:03 a.m. ET, the Dow Jones Industrial Average was down 211.16 points, or 0.64%, at 32,844.35, the S&P 500 was down 30.67 points, or 0.74%, at 4,114.91, and the Nasdaq Composite was down 91.57 points, or 0.73%, at 12,468.68.

Citigroup Inc fell 3.1% as the lender plans to pursue an initial public offering of its Banamex unit.

Meta Platforms Inc began its final batch of layoffs, its shares dipped 0.1%.

Agilent Technologies Inc shares plunged 11.2% after the company cut its annual sales and profit forecasts.

Chipmaker Nvidia Corp fell 1.7% ahead of its quarterly earnings after markets close.

Among mid-cap retail earnings, Kohl's Corp advanced 9.3% as the department store chain posted a surprise first-quarter profit and reaffirmed its annual sales forecast.

Urban Outfitters Inc jumped 12.9% as the apparel retailer posted upbeat first-quarter results, boosted by strong demand and leaner inventory levels.

Abercrombie & Fitch Co soared 22.6% after the apparel retailer raised its annual sales forecast, betting on steady demand.

Declining issues outnumbered advancers by a 4.57-to-1 ratio on the NYSE and by a 3.14-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and six new lows, while the Nasdaq recorded 14 new highs and 51 new lows. (Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru Editing by Vinay Dwivedi)