US STOCKS-Wall St slips after six-day run; Japan data weighs

* Japan's gross domestic product weaker than expected
* CBOE VIX closes at lowest level in more than 5 yrs
* Tesoro eyes West Coast empire with BP refinery deal;
shares jump
* Indexes: Dow falls 0.3 pct; S&P down 0.1 pct; Nasdaq up
0.1 pct

By Angela Moon
NEW YORK, Aug 13 (Reuters) - U.S. stocks ended slightly
lower o n M onday as fatigue set in after a six-day rally and
disappointing Japanese growth data provided a fresh reminder of
the headwinds facing the global economy.
The benchmark S&P 500 index had risen 3 percent over the
prior six sessions, its longest rally since December 2010. But
gains had slowed, with the index hovering at highs not seen
since May. The S&P 500 was still up 1.8 percent for the month.
Stocks have been buoyed by expectations central banks would
step in soon to support the flagging global recovery and roll
back the euro zone debt crisis.
Much of the action, however, is unlikely before September,
when the Federal Reserve and European Central bank next hold
policy meetings, leaving markets in a holding pattern until
then.
"Coming off the heels of a light week on the economic front,
the markets remain in what some have called a state of 'melting
up.' Whether the market's strength is artificially induced or
not, the greater risk for traders at the moment is in missing
out on the upside," said Randy Frederick, managing director of
Active Trading & Derivatives at Charles Schwab.
With "the European Central Bank, the U.S. Federal Reserve
and the People's Bank of China all standing in the wings ready
to take action to support their respective economies, the
downside risks in the market have been greatly reduced at the
moment," he added.
The CBOE VIX Volatility index, seen as a proxy for
investors' fears, fell more than 7 percent to 13.70, its lowest
level in over five years. The decline was unusual as the index
typically moves inversely to the S&P 500, suggesting investors
were not overly concerned about the market's outlook.
"Bullish sentiment in equities remains high with S&P 500
1-month call-side skew now at the 98th percentile," said Credit
Suisse equity derivatives strategy team.
A skew refers to the balance between options betting on the
S&P 500 falling - puts - or rising - calls.
The Dow Jones industrial average ended down 38.52
points, or 0.29 percent, at 13,169.43. The Standard & Poor's 500
Index was down 1.76 points, or 0.13 percent, at 1,404.11.
The Nasdaq Composite Index was up 1.66 points, or 0.05
percent, at 3,022.52.
Japan's gross domestic product expanded just 0.3 percent in
the April-June period, half the expected pace, raising doubts
about the strength of the recovery and highlighting the impact
of Europe's debt crisis on worldwide demand.
Late on Friday, the head of the San Francisco Federal
Reserve said the Fed should launch a fresh round of bond buying
to lower the U.S. unemployment rate more quickly, fueling
speculation that the central bank could soon unveil a new round
of stimulus.
Much of the money entering the U.S. equity market since the
rally started in June has gone into defensive sectors. But
investors are eyeing early signs that more aggressive areas of
the market -- such as small-caps and cyclical sectors -- are
starting to do better, a key factor if the rally is to continue.
"Those are the sectors that will need to lead to continue
the rally, whether they can do it on their own remains to be
seen. I'm not sure we will get out of the summer without a
pullback," said Janna Sampson, co-chief investment officer at
OakBrook Investments LLC in Lisle, Illinois.
Sampson said she was still cautious over the potential for
developments in Europe's debt crisis to blindside the market,
adding that she would closely watch data to see if improvement
in the U.S. labor market would continue.
Tesoro Corp moved on Monday to create the biggest
U.S. refining empire in the Pacific Basin with a $2.5 billion
deal to buy BP's Carson plant in the isolated California
market. Tesoro shares rose 9.5 percent to $38.87 while
U.S.-listed shares of BP fell 0.7 percent to $42.09.
According to Thomson Reuters data through Monday, of the 454
companies in the S&P 500 that have reported second-quarter
earnings to date, 68 percent have reported earnings above
analyst expectations, matching the beat rate for the last four
quarters.
Volume was light on Monday, with about 4.5 billion shares
traded on the New York Stock Exchange, the American Stock
Exchange and Nasdaq, well below last year's daily average of
7.84 billion.