US STOCKS-Economic woes trip up Wall St in light volume

                                

                                
 * HP shares slide after 3PAR offer
                                
 * Utilities sector leads gains as buyers seek safety
                                
 * Dow, S&P down 0.4 pct, Nasdaq down 0.9 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates with volume in final two paragraphs)
                                
 By Leah Schnurr
                                
 NEW YORK, Aug 23 (Reuters) - U.S. stocks slipped in one of
the lightest volume sessions of the year on Monday as investors
took refuge in defensive shares after the latest corporate M&A
failed to soothe concerns the recovery is stalling.
                                
 Technology shares weighed on the broad market and sent the
Nasdaq composite lower as a possible bidding war over data
storage company 3PAR <PAR.N> between Hewlett-Packard Co <HPQ.N>
and Dell Inc <DELL.O> sent shares of HP 2 percent lower.
                                
 The bid comes on the heels of other deals last week,
including acquisition offers from Intel Corp <INTC.O> and BHP
Billiton <BHP.AX> and had pushed indexes higher at the
session's open.
                                
 "Overriding the M&A buzz -- which didn't have a lot of
longevity -- is the fact that economic data still remains very
poor and there's concern that the much-discussed soft patch has
the potential to become something greater," said Bucky Hellwig,
senior vice president at BB&T Wealth Management in Birmingham,
Alabama.
                                
 Analysts said the recent spate of M&A also points to
companies continuing to make profits through cost cutting
rather than through revenue growth and highlights the economy's
weakness.
                                
 Mergers also typically lead to job cuts, casting another
shadow over an already weak labor market.
                                
 "Companies can do well versus the overall economy for a
certain length of time, but pretty soon they are going to have
to see better top-line growth," said Scott Wren, senior equity
strategist at Wells Fargo Advisors in St. Louis.
                                
 The Dow Jones industrial average <.DJI> slipped 39.21
points, or 0.38 percent, to 10,174.41. The Standard & Poor's
500 Index <.SPX> lost 4.33 points, or 0.40 percent, to
1,067.36. The Nasdaq Composite Index <.IXIC> fell 20.13 points,
or 0.92 percent, to 2,159.63.
                                
 Composite volume on the New York Stock Exchange, the
American Stock Exchange and Nasdaq was one of the lightest of
the year at about 6.13 billion as investors stayed to the
sidelines and others were away.
                                
 Michael O'Rourke, chief market strategist at BTIG LLC in
New York, wrote that weekly equity volumes the past couple
weeks have been 24 percent below the weekly averages for all of
2010.
                                
 The S&P 500 also broke through a support level of 1,170
after holding up earlier in the day. The level had formed a
floor for the index of late and represents the 50 percent
retracement of the most recent rally from July 1 to August 9.
                                
 Gains by utilities, healthcare and other defensive sectors
stemmed declines. The S&P 500 utilities sector <.GSPU> gained
0.6 percent, while the healthcare group <.GSPA> added 0.3
percent.
                                
 Cyclical sectors led the way down, including industrial
shares, which are more economically sensitive. Caterpillar Inc
<CAT.N> gave up 2.9 percent at $66.84.
                                
 The Nasdaq fared worse than the other two indexes,
extending losses late in the day as technology shares slipped.
Lingering concerns about the stalling economic recovery weighed
on tech.
                                
 The Dow and S&P 500 have notched two straight weeks of
losses on gloominess over softer-than-expected data in recent
days. Investors will get more data this week, with July
existing-home sales due on Tuesday and the government's revised
reading for gross domestic product due on Friday.
                                
 HP, the computer maker, bid $24 a share in cash for 3PAR,
topping an earlier bid from Dell. Shares of 3PAR surged 44.6
percent to $26.09, while HP dropped 2 percent to $39.04. Dell
shares fell 1.1 percent to $11.94. For details see
[ID:nN23188685].
                                
 3M Co's <MMM.N> Chief Executive George Buckley said the Dow
component may spend about $2 billion on acquisitions in 2010,
twice its previous estimate. 3M shares added 0.5 percent to
$81.08. [ID:nTOE67M07U]
                                
 About 6.13 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, well below
last year's estimated daily average of 9.65 billion.
                                
 Declining stocks slightly outnumbered advancing ones on the
NYSE by 1,889 to 1,105, while on the Nasdaq, decliners beat
advancers 1,937 to 673.
 (Reporting by Leah Schnurr; Editing by Kenneth Barry)