* Producer prices fall for third straight month in Nov
* Investors cautious before Fed meeting next week
* Qualcomm says COO Steve Mollenkopf to become CEO in March
* Indexes up: Dow 0.03 pct, S&P 0.05 pct, Nasdaq 0.2 pct
By Angela Moon
NEW YORK, Dec 13 (Reuters) - U.S. stocks were modestly higher on Friday, bouncing back after a three-day drop, though market participants remained cautious ahead of a Federal Reserve policy meeting next week.
Data showing a third straight month of decline in producer prices supported the day's gains as it pointed to a lack of inflation that could give the Federal Reserve pause as it weighs the future of its monthly bond purchases.
Investors have been concerned that recent signs of strength in the economy may persuade the Fed, which holds a two-day policy meeting next week, to soon scale back its market-friendly stimulus.
"The market is digesting a three-day decline, taking a pause from the selloff. Once we get the Fed news out of the way next week, then I expect the seasonal factor to kick in and we may see historical highs again leading up to the new year," said Ryan Detrick, analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
Despite the day's gains, the S&P 500 index was on track to end the week lower. The benchmark was now set for its worst decline since the end of August.
Global equities were headed for their biggest two-week drop since June and the dollar hit 5-year highs against the yen on Friday amid concern U.S. stimulus may be wound down following the Fed policy meeting on Dec. 17-18.
The Dow Jones industrial average rose 4.97 points or 0.03 percent, to 15,744.4, the S&P 500 gained 0.87 points or 0.05 percent, to 1,776.37 and the Nasdaq Composite added 8.994 points or 0.22 percent, to 4,007.397.
Chipmaker Qualcomm Inc said Chief Operating Officer Steve Mollenkopf will become chief executive in March, replacing Paul Jacobs who will be executive chairman. Qualcomm shares were up 0.6 percent at $73.13.
Anadarko Petroleum Corp and its Kerr-McGee unit acted with "intent to hinder" when they spun off Tronox, a paint materials company that later went bankrupt, and should pay billions of dollars in environmental cleanup costs, a judge ruled on Thursday. The decision had been awaited for about a year since a trial wrapped up in late 2012. The stock fell nearly 11 percent to $74.59.
Twitter Inc was forced to nix a change to its "block" feature on Thursday after users protested that the new policy empowered perpetrators of online abuse. Twitter shares rose 3.8 percent to $57.43.
Investors in U.S.-based funds pulled $6.51 billion out of stock mutual funds in the week ended Wednesday, the biggest weekly outflow this year, on worries over an imminent wind-down of Fed bond purchases, data from Thomson Reuters' Lipper service showed on Thursday.