US STOCKS-Wall Street rally stumbles as bank fears reemerge

                                
 * Banks fall on negative comments from analyst
                                
 * Sun Micro, IBM talks said to break down
                                
 * Declines break market's four-day winning streak
                                
 * Dow off 0.5 pct, S&P 500 off 0.8, Nasdaq off 0.9
                                
 * For up-to-the-minute market news click [STXNEWS/US]
 (Adds details)
                                
 By Leah Schnurr
                                
 NEW YORK, April 6 (Reuters) - U.S. stocks broke a four-day
winning streak on Monday after a prominent analyst revived
worries over the health of banks and the potential collapse of
a takeover of Sun Microsystems bruised sentiment in the
technology sector.
                                
 Bank shares slipped after veteran analyst Mike Mayo, of
Calyon Securities, cited the ongoing consequences of
risk-taking by banks and warned of rising loan losses by the
end of 2010. He rated a number of big and regional banks at
"underperform" or "sell." For more, see [ID:nN06322858]
                                
 JPMorgan Chase & Co <JPM.N> tumbled 3.7 percent to $28.20,
while Wells Fargo <WFC.N> dropped 6.7 percent to $15.25. The
renewed worries about banks came after stocks rallied off
12-year lows in the last month, fueled in part by reassuring
comments from major banks about their performance in the
beginning of the year.
                                
 "A few people came out and said the banks weren't in great
shape and that's all it's going to take," said Warren Simpson,
managing director at Stephens Capital Management in Little
Rock, Arkansas. "Whether or not these infusions from the
government will be enough, nobody knows.
                                
 "Uncertainty leads to fear and fear leads to selling."
                                
 Shares of Sun Microsystems Inc. <JAVA.O> dove 22.5 percent
to $6.58 after a source with knowledge of the matter said talks
with IBM <IBM.N> to acquire its smaller rival broke down.
 [ID:nL6578542] IBM eased 0.7 percent to $101.56 and was among
the top drags on the Dow.
                                
 The Dow Jones industrial average <.DJI> fell 41.74 points,
or 0.52 percent, to 7,975.85. The Standard & Poor's 500 Index
<.SPX> lost 7.02 points, or 0.83 percent, to 835.48. The Nasdaq
Composite Index <.IXIC> was down 15.16 points, or 0.93 percent,
at 1,606.71.
                                
 The KBW Bank index <.BKX> fell 3.8 percent. But stocks came
off earlier lows with some investors encouraged by a reassuring
assessment of the bank sector from another closely followed
bank analyst, Meredith Whitney. Whitney said banks will by and
large have made "a little bit of money" in the first quarter.
[ID:nWEN6943].
                                
 Billionaire investor George Soros, meanwhile, told Reuters
the U.S. economy was in for "a lasting slowdown" and that it
wouldn't recover in 2009. He also said the "banking system as a
whole is basically insolvent." [ID:nN06386461].
                                
 Resource shares also pressured the market as the price of
oil and other commodities fell. Chevron <CVX.N> was down 0.8
percent at $69.89 and U.S. front month crude <CLc1> fell $1.46
to $51.05 a barrel.
                                
 On the Nasdaq, Cisco Systems <CSCO.O> slid 3.5 percent to
$17.53 and was one of the index's top weights after Goldman
Sachs cut the stock to a "neutral" rating and removed it from
the firm's "Conviction Buy" list. [ID:nBNG409642]
                                
 Since hitting a bear market closing low on March 9, the S&P
500 is up more than 23 percent, spurred by hopes that the
economic slump is moderating and banks are stabilizing as
policy-makers continue an aggressive campaign to shore up the
system.
                                
 The recent momentum in financials and sectors such as
technology, which analysts say may lead a recovery, helped   
the Dow rack up its best four weeks since 1933.
                                
 On the bright side, shares of defense companies such as
Boeing <BA.N> fared well after Defense Secretary Robert Gates
unveiled a 2010 budget plan for defense spending. The plan
would cancel several big-ticket weapons programs but add
funding for unmanned aerial vehicles and other programs.
[ID:nN06412255].
                                
 Shares of Boeing rose 1.3 percent to $38.16 and was among
the Dow's leaders. As part of the plan, the Pentagon would buy
another 31 of the company's F/A-18 fighter jets in 2010.
                                
 In the backdrop of the day's sell-off was the start of the
first-quarter earnings season, which gets under way when Alcoa
<AA.N> reports on Tuesday. Alcoa finished down 3.2 percent at
$7.91. Earnings for S&P 500 companies are expected to fall by
36.7 percent, according to Thomson Reuters data.
                                
 Trading was moderate on the New York Stock Exchange, with
about 1.3 billion shares changing hands, below last year's
estimated daily average of 1.49 billion, while on Nasdaq, about
2.05 billion shares traded, belowlast year's daily average of
2.28 billion.
                                
 Declining stocks outnumbered advancing ones on the NYSE by
2,098 to 923 while decliners beat advancers on the Nasdaq by
about 1,866 to 812.
 (Additional reporting by Chuck Mikolajczak; Editing by Leslie
Adler)