* Fitch cuts Italy credit rating after election impasse
* China data show uneven economic recovery, policy dilemma
* Dell, Icahn enter into confidentiality agreement
* Indexes: Dow off 0.1 pct, S&P off 0.1 pct, Nasdaq off 0.2 pct
By Angela Moon
NEW YORK, March 11 (Reuters) - Wall Street edged lower on Monday as investors paused after Italy's credit downgrade and disappointing Chinese economic data after last week's rally that took the Dow to record highs.
Despite the decline, the S&P 500 index was about 1 percent away from its all-time closing high. The broad market index climbed for a sixth straight day on Friday and ended nine of the past 10 weeks higher. All three major U.S. stock indexes racked up the biggest weekly gains since the first week of the year.
European shares dipped as investors digested Fitch's downgrade of Italy on account of the euro zone member's political stalemate, which raised the specter of a new debt crisis.
In China, uneven economic recovery signals a dilemma for policymakers as official data over the weekend showed inflation at a 10-month high in February while factory output and consumer spending were weaker than forecast.
"The market is taking a mild pause, evaluating new information," said Andre Bakhos, director of market analytics at Lek Securities in New York.
"But this doesn't at all mean we are moving away from the strong trend that we have been seeing. Pullbacks are windows of opportunity to just add more exposure."
Deals remain at the forefront of investors' minds.
Icahn Enterprises LP said it had entered into a confidentiality agreement with Dell Inc and looked forward to commencing a review of the company. Dell shares were up 0.9 percent at $14.30.
AT&T Inc is considering buying a 25 percent stake in India's Reliance Jio Infocomm Ltd, a telecommunications venture controlled by billionaire Mukesh Ambani, for $3.5 billion, the Times of India newspaper said. AT&T shares were down 0.4 percent at $36.52.
The Dow Jones industrial average was down 6.57 points, or 0.05 percent, at 14,390.50. The Standard & Poor's 500 Index was down 1.62 points, or 0.10 percent, at 1,549.56. The Nasdaq Composite Index was down 4.94 points, or 0.15 percent, at 3,239.43.
Genworth Financial Inc shares rose 7.1 percent to $10.54 following a report by Barron's that the mortgage insurer's stock could almost double in the next year, boosted by gains in mortgage and healthcare pricing.
Dick's Sporting Goods Inc shares 7.7 percent at $46.71 after the retailer reported lower-than-expected fourth-quarter results.
U.S. stocks closed out an historic week with gains on Friday, as the Dow hit yet another record closing high on a U.S. payrolls report that surpassed even the most optimistic forecasts.