Wall Street reslips as bank fears offset stimulus

NEW YORK (Reuters) - Stocks dipped in volatile trading on Friday as optimism over the expected passage of an economic stimulus was offset by persistent worries about the health of the banking sector.

Financials fell after Britain's Lloyds Banking Group posted a wider-than-expected losses, and investors remained in the dark about how the Obama administration would relieve U.S. banks of money-losing assets and revive lending.

Shares of Bank of America fell 3.2 percent to $5.68 on the New York Stock Exchange, while JPMorgan shed 2.6 percent to $25.53 and Wells Fargo shed 3.3 percent to $16.24.

The S&P financial index <.GSPF> declined 1.2 percent, and the KBW Bank index <.BKX> fell 1.6 percent, taking its weekly decline so far to 12 percent.

"You still have to stay away from banks. We been saying that for well over a year," said Cleveland Rueckert, market analyst at Birinyi Associates Inc, in Stamford, Connecticut.

"We've had bailouts that have been going on for 6 to 12 months. They may have helped by they haven't really solved the problem."

The Dow Jones industrial average <.DJI> fell 63.40 points, or 0.80 percent, to 7,869.36. The Standard & Poor's 500 Index <.SPX> slipped 6.15 points, or 0.74 percent, to 829.04. The Nasdaq Composite Index <.IXIC> declined 4.03 points, or 0.26 percent, to 1,537.68.

(Additional reporting by Ellis Mnyandu, Editing by Chizu Nomiyama)