Wall Street falls on worrisome German data, energy slides

NEW YORK (Reuters) - Stocks fell modestly on Monday after disappointing German data added to evidence about the weak prospects for the global economy's growth.

German business sentiment slipped for a fifth consecutive month in September, showing Europe's strongest economy was moving closer toward recession as the euro zone continues to struggle with its debt crisis.

Concerns about a stalling global economy were reflected in energy-related shares as the PHLX oil service sector index <.OSX> shed 1.4 percent to go with a 1.7 percent drop in U.S. crude oil. Global demand worries sent crude prices down more than 6 percent last week.

The S&P 500 had risen nearly 6 percent from the start of August through mid-September on expectations of central bank stimulus. On September 6, the ECB announced its bond-buying plan, and a week later, the Federal Reserve announced a third round of quantitative easing intended to bolster the economy and reduce U.S. unemployment.

The central bank actions have served to buoy stock prices and keep market corrections in check despite concerns about the global economy, with the S&P 500 unable to muster a move of more than 0.4 percent in either direction since the Fed's announcement.

"We've rallied back on what - nothing has gotten better - therefore, all that tells you the market is not operating on fundamentals, but on the fact that everyone knows (Bernanke) is there," said Ken Polcari, managing director of ICAP Equities in New York.

"This market should be off much more than it was in order to price the real risk in, the fact is, it can't."

The Dow Jones industrial average <.DJI> slipped 25.07 points, or 0.18 percent, to 13,554.40. The Standard & Poor's 500 Index <.SPX> shed 4.12 points, or 0.28 percent, to 1,456.03. The Nasdaq Composite Index <.IXIC> fell 21.38 points, or 0.67 percent, to 3,158.59.

The Nasdaq was pulled lower by Apple Inc , which shed 1.4 percent to $690.16 even as the company sold out of its latest smartphone as concerns arose that the iPhone maker was unable to produce the new phone fast enough to meet demand.

Homebuilder Lennar Corp reported steep increases in its third-quarter earnings and revenue, while orders rose 44 percent. Despite the solid results, Lennar's stock slid 1.8 percent to $36.85.

Lennar's results follow a similarly strong report from KB Home , and together indicate that the housing market is moving toward recovery.

Questcor Pharmaceuticals Inc plummeted 31.8 percent to $20.54 after it said it was being investigated by a U.S. government agency over its promotional practices.

Peregrine Pharmaceuticals Inc plunged 77.2 percent to $1.23 as the Nasdaq's most actively traded stock after the company said it found major discrepancies in results from a mid-stage study of its experimental lung cancer drug conducted by a third-party contractor.

(Editing by Jan Paschal)

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