* Investors turn focus to data, signals from Fed on stimulus
* Drug firm Perrigo to buy Elan; Publicis, Omnicom in merger
* U.S. pending home sales pull back in June as rates rise
* Dow off 0.4 pct, S&P down 0.5 pct, Nasdaq off 0.5 pct
By Alison Griswold
NEW YORK, July 29 (Reuters) - U.S. stocks fell on Monday as investor sentiment turned wary before a U.S. Federal Reserve meeting later this week that could signal when the Fed will begin to temper its ultra accomodative policy.
In addition, a data-packed week that includes July's payrolls report on Friday could sway the market.
Stocks dipped broadly, with all three major indexes moving lower and eight of the 10 S&P 500 sectors declining. Energy and financials were weakest, with losses around 1 percent.
Investors speculated about a statement to come on Wednesday at the end of a two-day meeting of the Fed's Open Market Committee. The statement will be scrutinized for hints on when the central bank may begin to scale back its massive bond-buying aimed at stimulating the economy and known as quantitative easing.
September is the most likely time for the Fed to begin paring its $85 billion in monthly bond purchases, according to a July 22 Reuters poll of economists.
"I think today we saw some better-than-expected economic data in Europe and here, and that's got people concerned that we are going to see a withdrawal of QE," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.
"There's a concern that whatever the FOMC says or does will lead to a dramatic reaction in the market, much like we saw in June."
Until recently, investors have interpreted average or weak economic data as a sign the Fed will continue to stimulate the economy and put a floor on stock prices. However, the prospect of a slightly less accommodative Fed in the near future has meant signs of a stronger economy have become more important to the market.
Contracts to purchase previously owned U.S. homes fell in June, retreating from a more than six-year high touched in May as rising mortgage rates were starting to dampen home sales.
The Dow Jones Industrial Average was down 64.15 points, or 0.41 percent, at 15,494.68. The Standard & Poor's 500 Index fell 8.41 points, or 0.50 percent, at 1,683.24, and the Nasdaq Composite Index lost 17.67 points, or 0.49 percent, at 3,595.49.
In the latest earnings, Loews Corp, the hotel, energy and financial services conglomerate, posted a jump in second-quarter profit as revenue from its insurance arm, CNA Financial, increased nearly 13 percent. Shares of Loews edged down 0.6 percent to $45.78.
Halfway through earnings season, 67.2 percent of S&P 500 companies have beaten analysts' expectations - in line with the 67 percent average beat over the last four quarters. About 56 percent of the companies have beaten revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons but below the historical average.
Merger activity could give equities support as big deals show that large investors see value in the market.
On Monday, U.S. drugmaker Perrigo agreed to buy Irish drug company Elan for $8.6 billion. U.S.-traded Elan shares rose 5.2 percent to $15.71. Perrigo was the S&P 500's worst performer after the news, shedding 6.7 percent to $125.22.
Shares in advertising groups jumped after Publicis and Omnicom said they would merge. Investors bet the deal would create an opening for rivals to poach defecting clients and potentially trigger more deals.
Omnicom shares gained 0.6 percent to $65.48 and smaller rival Interpublic Group gained 3.9 percent to $16.49.
"M&A deals are typically financed with debt, and if you're looking at an environment where the interest rates are going to go up, that would be an incentive to get moving," Massocca said.
"I don't think interest rates are going to go any lower."
Hudson's Bay Co, operator of department store chains Lord & Taylor in the United States and The Bay in Canada, said it would buy luxury retailer Saks Inc for $16 per share. Saks shares rose 3.6 percent to $15.86, while Hudson's Bay added 1.1 percent to $17.60.
Data on the housing and industrial sectors are scheduled in the first half of the week, followed by gross domestic product for the second quarter on Wednesday and the payrolls report on Friday.