By Kate Gibson

U.S. stocks fell Monday after starting off mixed, with financial shares weighing on the broader market and firms detailing their exposure to the alleged $50 billion fraud by Bernard Madoff.

"What's amazing is the magnitude of bad news that we've had to digest during the last two weeks, but still the market remains resilient," said Art Hogan, chief market strategist at Jefferies & Co.

After climbing two out of the last three sessions, the Dow Jones Industrial Average (DJI) on Monday shed 103 points to 8,523, with 25 of its 30 components posting losses.

As with the broader market, financials weighed the most on the blue-chip index, with J.P. Morgan Chase & Co. (JPM) off 7% and American Express Co. (AXP) down 2%. Bank of America Corp. (BAC) fell 4.8% and Citigroup Inc. (C) fell 3.5%.

The S&P 500 Index (SPX) fell 11 points to 868, with financials down the most, while energy fronted the S&P's limited gains among the index's 10 industry groups.

The bigger laggards among financial shares included Developers Diversified Realty Corp. (DDR), off 16%, and ProLogis (PLD), down 8%.

Noteworthy gains among financials included Peabody Energy Corp. (BTU), lately up 6%, and Consol Energy Inc. (CNX), up nearly 2%.

The Nasdaq Composite Index (RIXF) shed 29 points to 1,511.

Crude futures lost early gains, after rallying sharply last week ahead of a meeting of the Organization of Petroleum Exporting Countries on Wednesday. OPEC is expected to be cut production again. Light crude for January delivery was recently down 36 cents to $45.92 a barrel on the New York Mercantile Exchange. .

The dollar fell sharply against other major currencies, with the dollar index (DXY) down 1% to 82.33. .

"The uncertainty surrounding the fate of the U.S. auto industry, coupled with the market's expectation of an imminent Fed rate cut on Tuesday, pressured the dollar to start the week in a distresses state," said Rebecca Lia, a currencies analyst with Wachovia Corp.

Volume on the New York Stock Exchange neared 883 million, with decliners overtaking advancers 3 to 1. On the Nasdaq, more than 295 million shares traded, and decliners beat advancers nearly 2 to 1.

Record contraction

The economic calendar for Monday included the December Empire State Index, with the gauge of manufacturing activity in the New York region contracting at a record pace in November.

In a separate report, the Federal Reserve said output of the nation's factories, mines and utilities declined 0.6% in November on broad-based weakness across manufacturing industries. .

Investors also will be looking ahead to Tuesday's Federal Reserve interest-rate decision, where rates are expected to come down half a point to 0.5%. .

"The FOMC meeting should be overshadowed this week by earnings from Goldman Sachs Group (GS) on Tuesday and Morgan Stanley (MS) on Thursday," said Marc Pado, U.S. strategist at Cantor Fitzgerald.

The Wall Street Journal reported Monday that the Bush administration is sizing up what terms to seek from the auto industry in return for a bailout, including whether to push the companies to file for bankruptcy.

The White House is discussing a rescue totaling $10 billion to $40 billion or more, the Journal reported. "We've gone from expecting to hoping," said Hogan of the efforts to shore up the embattled industry.

Shares in General Motors Corp. (GM) and Ford Motor Co. (F) rose 5% and 3.6%, respectively.

As more details of the alleged fraud by former Nasdaq Chairman Bernard Madoff emerged, Banco Santander SA (STD) said its customers had an exposure of around $3.1 billion though its Optimal asset-management business, while Japan's Nomura Holdings Inc. (NMR) has an exposure of around $302 million.

Former Dow component Honeywell International Inc. (HON) shares rose 5% after the industrial company reaffirmed its full-year guidance. .

Late Sunday, Huntsman Corp. (HUN) ended its agreement to be acquired by Hexion Specialty Chemicals Inc. and reached a settlement over litigation. Huntsman said it is due payments totaling $1 billion.

In international markets, Japan's Nikkei 225 rose 5.3% and the French CAC 40 index added 0.3%.

Stocks on Friday erased early losses to close higher after the Bush administration said it would step in to prevent a failure of U.S. automakers, amid fears that more job losses would deepen the recession.

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.