REFILE-US STOCKS-Markets trade lower on concerns about China

Mon Mar 15, 2010 11:56am EDT

(Refiles to fix spelling of 'concerns' in headline)

* China stocks hit 5-week low on credit tightening woes

* Sen Dodd to unveil revised financial regulation proposal

* Citigroup upgrades Wal-Mart to "buy," shares rise

* Indexes down: Dow 0.4 pct; S&P 0.7 pct; Nasdaq 0.8 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Updates to midday, changes byline)

By Ryan Vlastelica

NEW YORK, March 15 (Reuters) - U.S. stocks fell on Monday on persistent concerns the Chinese government may tighten credit, potentially slowing the global economy, and as investors awaited details of a forthcoming financial regulation overhaul bill.

Shanghai's key stock index fell to its lowest close in five weeks on Monday as investors expect China's central bank to step up monetary tightening measures in the wake of higher-than-expected inflation. U.S.-listed shares of China Finance Online (JRJC.O) fell almost 3 percent.

"There's potential for the China situation to end up working out in our favor, but right now, there's no consensus on how this will play out in terms of currency or trade issues," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

"Until we figure out how this will play out, it will be an overhang."

Bank stocks were lower ahead of Senate Banking Committee Chairman Christopher Dodd's revised financial regulation proposal expected later on Monday. [ID:nN14160836]

The KBW Banks index .BKX fell 1 percent, and JPMorgan Chase & Co (JPM.N) fell 1 percent to $42.73.

"The bill could be onerous for institutions engaged in consumer banking," Kuby said, adding that some of the impact of the bill was priced into bank shares.

The Dow Jones industrial average .DJI dipped 42.77 points, or 0.42 percent, to 10,579.88. The Standard & Poor's 500 Index .SPX dropped 7.36 points, or 0.67 percent, to 1,142.32. The Nasdaq Composite Index .IXIC fell 19.50 points, or 0.83 percent, to 2,347.80.

The S&P Energy index .GSPE fell 1.7 percent and was the worst performer among S&P sectors as crude oil fell 2.3 percent to $79.34 per barrel on a stronger dollar. Dow component Exxon Mobil (XOM.N) fell 1.1 percent to $66.09.

Wal-Mart Stores Inc was the top percentage gainers among Dow components, rising 2.8 percent to $55.38 after Citigroup upgraded Wal-Mart to "buy," saying it could gain market share in its supermarket division without sacrificing margins. [ID:nSGE62E0R8]

Earlier on Monday, a gauge of manufacturing in New York state slipped in March, though the decline was slightly lower than expected. A separate report showed U.S. industrial output edged up 0.1 percent in February, likely restrained by severe winter weather. [ID:nN15167585]

Google Inc (GOOG.O) fell 3.7 percent to $557.88 after it said it remained in talks with the Chinese government about censorship of its Chinese-language search portal despite mounting signs the company could soon shut the site. Chinese search firm Baidu Inc (BIDU.O) surged 7 percent to $589.10. [ID:nTOE62E03R] (Editing by Padraic Cassidy)

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