US STOCKS-Wall Street falls amid caution on U.S.-China trade dispute

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* GM dips as UAW rejects latest offer

* Indexes down: Dow 0.4%, S&P 500 0.5%, Nasdaq 0.3%

(Updates to close)

By Caroline Valetkevitch

NEW YORK, Oct 7 (Reuters) - U.S. stocks eased on Monday as

reports on the U.S.-China trade front kept investors cautious

ahead of scheduled talks later in the week.

A report that Beijing was increasingly reluctant to agree to

a broad trade deal pursued by President Donald Trump weighed on

sentiment early.

But White House economic adviser Larry Kudlow helped ease

some anxiety, saying it was possible U.S. and Chinese trade

negotiators could make progress when they meet in Washington,

and said the United States was open to looking at what proposals

Beijing brought.

Stocks briefly traded higher in the afternoon after a Fox

reporter tweeted that the Chinese commerce ministry said China

is ready to do a deal with the United States on parts of

negotiations. U.S. and Chinese deputy trade negotiators launched a new

round of talks on Monday aimed at resolving the two nations'

15-month trade war, while the White House officially confirmed

that the high-level talks, involving Chinese Vice Premier Liu

He, U.S. Trade Representative Robert Lighthizer and Treasury

Secretary Steven Mnuchin would begin on Thursday. "The markets are trying to come up with some expectation for

the outcome of trade talks and figure out where and how they

want to price it in," said Shawn Cruz, manager of trader

strategy at TD Ameritrade in Jersey City, New Jersey.

The Dow Jones Industrial Average .DJI fell 95.7 points, or

0.36%, to 26,478.02, the S&P 500 .SPX lost 13.22 points, or

0.45%, to 2,938.79 and the Nasdaq Composite .IXIC dropped

26.18 points, or 0.33%, to 7,956.29.

Tariff concessions from the United States and China last

month had fueled hopes of a resolution to the prolonged dispute.

Anxiety over the trade war and mixed economic indicators has

been offset by increased expectations of a third interest rate

cut this year by the Federal Reserve.

"We had a pretty good rally back from the lows on Friday,

and we're sort of back into the middle of the recent trading

range," said Rick Meckler, partner at Cherry Lane Investments, a

family investment office in New Vernon, New Jersey.

"Investors are trying to balance what seems like a weaker

economy with low interest rates. What could change it could be

something coming out of the talks with China this week."

Investors will soon turn their focus to third-quarter

earnings, which begin next week with U.S. banks reporting, and

many hope to see more clarity on the impact of the trade war on

corporate America.

Analysts expect the lowest quarterly profit performance

since 2016, with S&P 500 earnings seen falling nearly 3% from a

year earlier, based on IBES data from Refinitiv. General Motors Co GM.N eased 0.5% after the UAW rejected

the carmaker's latest offer of a four-year labor contract.

Declining issues outnumbered advancing ones on the NYSE by a

1.59-to-1 ratio; on Nasdaq, a 1.37-to-1 ratio favored decliners.

The S&P 500 posted 10 new 52-week highs and 1 new low; the

Nasdaq Composite recorded 30 new highs and 91 new lows.

Volume on U.S. exchanges was 5.73 billion shares, compared

with the 7.23 billion average for the full session over the last

20 trading days.