US STOCKS-Wall St lower on China, jitters over bank bill

Mon Mar 15, 2010 1:00pm EDT

* Investors worry about Chinese credit-tightening

* Sen Dodd to unveil revised financial regulation proposal

* Wal-Mart rises after Citigroup upgrade

* Indexes down: Dow 0.2 pct; S&P 0.6 pct; Nasdaq 0.8 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Updates to early afternoon)

By Ryan Vlastelica

NEW YORK, March 15 (Reuters) - U.S. stocks fell on Monday as investors worried the Chinese government may tighten credit, potentially slowing the global economy, and waited for a revised financial regulation bill in the Senate.

Shanghai's key stock index fell to its lowest close in five weeks on Monday on expectations China's central bank would step up monetary tightening measures after news of higher-than-expected inflation.

U.S.-listed shares of China Finance Online (JRJC.O) fell almost 3 percent. On Sunday Chinese Premier Wen Jiabao said it would be difficult for China to promote fast growth and "... manage inflation expectations all at the same time." For details, see [ID:nTOE62D001].

"That China is making these moves is a sign that the economy could be stronger, but in the short-term there are concerns that we're not yet on a firm enough footing to stand this," said John Massey, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey.

Banks were lower before Senate Banking Committee Chairman Christopher Dodd's release of a proposed financial regulation overhaul bill expected later on Monday. [ID:nN14160836]

The KBW Banks index .BKX fell 0.9 percent while Dow component JPMorgan Chase & Co (JPM.N) fell 0.8 percent to $42.83.

"The bill could be a little more restrictive than previously thought if parts of the Volcker rule are in there," Massey said. "Right now investors are waiting to see exactly how much this could impact everyone."

The Dow Jones industrial average .DJI dipped 25.39 points, or 0.23 percent, to 10,600.89. The Standard & Poor's 500 Index .SPX dropped 6.33 points, or 0.55 percent, to 1,143.89. The Nasdaq Composite Index .IXIC fell 18.05 points, or 0.76 percent, to 2,349.30.

The S&P Energy index .GSPE fell 1.6 percent and was the worst performer among S&P sectors as crude oil fell 2.2 percent to $79.43 per barrel on a stronger dollar. Dow component Exxon Mobil (XOM.N) fell 1.1 percent to $66.08.

Wal-Mart Stores Inc (WMT.N) was the top percentage gainer among Dow components, rising 2.7 percent to $55.36 after Citigroup upgraded Wal-Mart, 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]

Weighing on the Nasdaq, 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 5.9 percent to $582.95. [ID:nTOE62E03R] (Editing by Kenneth Barry)

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