NEW YORK - US STOCKS fell in opening trade on Monday as a investors remained tense amid a deepening of bank problems in Europe and a takeover of Wachovia's banking operations by Citigroup.

The Dow Jones Industrial Average slid 165.83 points (1.49 per cent) to 10,977.30 and the Nasdaq slumped 46.28 points (2.12 per cent) to 2,137.06 in the first exchanges.

The broad-market Standard & Poor's 500 index sank 23.62 points (1.95 per cent) to 1,189.65.

The market action came amid steep losses in European bourses following news of a government bailout of financial giant Fortis by the Belgian, Dutch and Luxembourg governments.

In the US, Citigroup agreed to take over the banking operations of Wachovia in a deal backed that gives the US government a stake in one of the nation's largest banks, highlighting the ongoing woes of the sector.

The market failed to get a lift from a weekend deal announced by leading US lawmakers on a financial sector rescue worth up to 700 billion dollars aimed at steadying the banking sector and the economy.

Mr Patrick O'Hare at Briefing.com said it was unclear if the bill would win final approval and that even it did, the prospects for helping the sector were uncertain.

'The market certainly doesn't seem enamored with the plan,' he said.

'There are just enough add-ons ... that make one question whether the financial firms themselves will see the plan as enough of an incentive to sell their distressed assets.' -- AFP