US STOCKS-Semis, financials drag Wall St lower

                                
   * Berkshire bid for Burlington Northern boosts railroads
                                
 * UBS posts qtrly loss; RBS, Lloyds, agree to shake-up
                                
 * Morgan Stanley downgrades semis, shares fall
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
                                
 (Updates to morning trading)
                                
 By Rodrigo Campos
                                
 NEW YORK, Nov 3 (Reuters) - U.S. stocks fell on Tuesday, weighed by
technology and financial shares, as Morgan Stanley downgraded the semiconductor
sector and after a shake-up at two big British banks and poor results from
Swiss lender UBS.
                                
 The market decline came even as Warren Buffett's Berkshire Hathaway agreed
to buy Burlington Northern in an acquisition deal that values the railroad
company at $34 billion, and is Berkshire's biggest deal ever. Burlington shares
surged 28 percent to $97.43.
                                
 Financials and technology issues have driven much of the market's recovery,
and today's negative developments weighed on sentiment.
                                
 The PHLX semiconductor index <.SOXX> fell 2.5 percent after Morgan Stanley
downgraded the sector to "cautious" from "attractive," and cut its view on
Intel Corp <INTC.O>.
                                
 "The Morgan Stanley note is taking a defensive posture," said Bennett
Gaeger, managing director at Stifel Nicolaus in Baltimore. "People take profits
after such a big run. At this point it looks like Morgan Stanley is just taking
some money off the table."
                                
 Financials fell after Swiss lender UBS AG <UBSN.VX><UBS.N> posted its
fourth consecutive quarterly loss and Britain's Royal Bank of Scotland Plc
<RBS.L> and Lloyds Banking Group Plc <LLOY.L> agreed to sell hundreds of
branches and key businesses to appease European Union concerns over state aid
and competition. [ID:nL2713325] and [ID:nL3638494]
                                
 The KBW banks index <.BKX> fell 1.2 percent.
                                
 "The markets remain lower because overseas markets were weak last night.
We're getting some carry-over from that. The markets have been up so much that
everyone is suggesting that we're ripe for a correction or a setback, which I
think has become a little self-fulfilling," said Charles Lieberman, chief
investment officer of Advisors Capital Management LLC in Paramus, New Jersey.
                                
 The Dow Jones industrial average <.DJI> dropped 31.44 points, or 0.32
percent, to 9,758.00. The Standard & Poor's 500 Index <.SPX> fell 3.01 points,
or 0.29 percent, to 1,039.87. The Nasdaq Composite Index <.IXIC> lost 11.54
points, or 0.56 percent, to 2,037.66.
                                
 The day's bright spot came courtesy of Buffett's Berkshire Hathaway Inc's
<BRKa.N> offer to buy railroad Burlington Northern Santa Fe Corp <BNI.N> for
$100 a share. For details see [ID:nN03483590].
                                
 Among its peers, Union Pacific Corp <UNP.N> gained 5.4 percent to $58.02,
and CSX Corp <CSX.N> was up 5.4 percent at $45.19. The iShares Dow Jones
Transportation Average ETF <IYT.P> climbed 4.6 percent to $67.21.
                                
 The S&P industrials sector <.GSPI> gained 1 percent.
                                
 The Federal Open Market Committee begins around 2 p.m. EST (1900 GMT) a
two-day meeting on interest rate policy and is expected to keep interest rates
close to zero.
                                
 (Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)