* Citigroup profit hit by bond trading slowdown; shares dip
* Volume reduced as investors watch fiscal negotiations
* Teradata drops sharply after profit warning
* Indexes mixed: Dow down 0.1 pct; S&P up 0.01 pct; Nasdaq up 0.2 pct
By Julia Edwards
NEW YORK, Oct 15 (Reuters) - U.S. stocks were little changed on Tuesday and trading was light as division between senators and congressmen in talks to extend the U.S. borrowing limit and reopen the government kept investors from making major new bets.
Washington's stalemate distracted investors from the beginning of a busy week of earnings. Citigroup reported weaker-than-expected results as the bank was hit by a double-digit drop in bond trading revenue for the quarter. Shares fell 0.4 percent to $49.43.
Markets have rallied in the past several days as optimism grew that lawmakers would agree to end the partial government shutdown and eliminate the risk of a U.S. default by approving more borrowing authority. Representatives in the House and Senate were currently working toward separate bills.
House Republicans said their plan would re-open the government and extend the debt ceiling until Feb. 7, but it included changes to the healthcare law, which the White House rejected.
"Something permanent would be the most positive," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore. "You would want a positive budget resolution and maybe a grand bargain. Those things just aren't going to happen."
At this point, Mata said, even a stop-gap bill would boost equities.
All ten S&P sectors were down with utilities declining the sharpest, down 0.6 percent. Utilities, as big debt issuers, could see their borrowing costs rise if the U.S. delayed or defaulted on its debt payments.
The Dow Jones industrial average was down 63.95 points, or 0.42 percent, at 15,237.31. The Standard & Poor's 500 Index was down 5.33 points, or 0.31 percent, at 1,704.81. The Nasdaq Composite Index was down 6.51 points, or 0.17 percent, at 3,808.77.
Shares of Teradata Corp fell 16 percent to $44.00, a day after the data analytics firm cut its full-year earnings forecast by about 10 percent.
Several other S&P 500 index components report results later in the day, including Yahoo Inc and Intel Corp after the closing bell.
Johnson & Johnson reported stronger-than-expected quarterly results on strong growth for its prescription drugs. The stock was up 0.4 percent at $90.16.
Coca-Cola Co reported higher earnings and lower revenue, helped by strong global sales of its Coca-Cola brand products. But the stock was off 0.03 percent at $37.91.
Data showed the pace of growth in New York state's manufacturing sector slipped this month to its slowest since May, but business optimism stayed strong.