US stocks closed with modest losses on Monday after a light-volume session amid investor nervousness ahead of the Federal Reserve's interest-rate decision Tuesday and as a UK lender's ongoing trouble added to worries about the global credit crunch. Northern Rock PLC, Britain's fifth-largest mortgage lender, saw its stock plunge and customers withdraw billions of dollars after it issued a profit warning Friday and requested emergency funds from the Bank of England.

The market is betting on a rate cut from the Fed when the central bank meets Tuesday, but investors are not completely sure what it will do and what it will say in its accompanying economic statement. Belief that the Fed will only ease 25 basis points instead of 50 is weighing on the market, analysts said. Furthermore, with the major brokerages' third-quarter results yet to be released, investors are uncertain about how badly the summer's stock downturn, souring home loans, and credit squeeze hit the banking industry.

It's possible the Fed won't go through with a rate cut at all if it believes the economy is still growing moderately and that inflation remains a threat, but most investors expect the Fed to cut the benchmark federal funds rate, now at 5.25%, by at least a quarter-point. And because negative economic data have trickled in over the last couple weeks -- such as a decrease of 4,000 jobs in August and weaker-than-expected retail sales -- some anticipate a half-point rate cut.

The Dow Jones industrial average fell 39.10, or 0.29%, to 13,403.42. Broader stock indicators showed somewhat steeper losses. The Standard & Poor's 500 index fell 7.60, or 0.51%, to 1,476.65, and the Nasdaq composite index lost 20.52, or 0.79%, to 2,581.66. The Russell 2000 index, which tracks small company stocks, fell 7.68, or 0.98%, to 775.81. Bonds rose modestly, pushing the yield on the 10-year Treasury note down to 4.47% from 4.48% late Friday.

Trading volumes were lighter than usual, with some investors opting to sit out of the action ahead of the Fed meeting Tuesday. Volume at the New York Stock Exchange topped 1.1 million shares, with declining stocks outpacing advancers 11 to 5. At the Nasdaq, more than 1.4 billion shares exchanged hands, and declining issues topped advancing stocks 5 to 2. Ahead of the opening bell, stock futures maintained their losses after the New York Federal Reserve reported a slight slowdown in manufacturing activity in the New York area in September, with its Empire State Manufacturing index falling to 14.7 points from 25.1 in August.


Indian ADRs end mixed; Patni falls more than 4.5%

Indian ADRs ended on a mixed note yesterday. Patni was amongst the major losers down more than 4.5%. In the technology pack, Infosys Technologies was down 0.51% at 46.97, Patni Computers was down 4.5% at 21.20, Satyam Computers was down 0.5% at 23.81, while Wipro ended the day 0.15% higher at 13.68.

In the non-technology pack, HDFC Bank was down 1.49% at 89.79, VSNL was up 1.68% at 19.97, ICICI Bank was down 0.27% at 44.56, MTNL was up 1.83% at 7.23, Tata Motors was up 0.35% at 17.08, Dr Reddy's Lab was down 1.18% at 15.93 and Sterlite was down 0.06% at 16.14.