Trader's Highlight

DJI-NEW YORK, July 29 (Reuters) - U.S. stocks fell on Wednesday as investors worried that China might be ready to hit the brakes on lending, a move that could curb demand and hinder the global economic recovery.

Concerns about China hurt commodity prices and hit shares in the energy and raw materials sectors, while a steep drop in U.S durable goods orders in June fed fears of more economic weakness.

China's two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, a move that will significantly slow overall Chinese credit growth in the year's second half.

Further weighing down stocks, yields of shorter-dated U.S. Treasuries briefly hit five-week highs after the week's second poor auction, increasing concern of a possible spike in borrowing costs.

The Dow Jones industrial average <.DJI> dropped 26 points, or 0.29 percent, to close at 9,070.72. The Standard & Poor's 500 Index <.SPX> fell 4.47 points, or 0.46 percent, to 975.15. The Nasdaq Composite Index <.IXIC> lost 7.75 points, or 0.39
percent, to 1,967.76.

NYMEX-NEW YORK, July 29 (Reuters) - U.S. crude oil futures ended down more than 5 percent, the biggest single-day percentage loss for front-month crude since April, as government data showed a surprisingly large build in crude oil inventories last
week.

The data defied analysts' forecasts for a stock drawdown and confirmed the American Petroleum Institute's report late Tuesday that crude stocks rose sharply last week.

On the New York Mercantile Exchange, September crude settled down $3.88, or 5.77 percent, at $63.35 a barrel, trading from $63.04, the lowest since the July 17 low of $61.04, to $67.01. In post-settlement trading, the day's low extended to $62.70 by 1926 GMT. The loss was the biggest percentage loss for a day for front-month crude since April 20's 8.84 percent fall.

CBOT-SOYBEANS - August up 3 cents at $10.57-1/2; November down 11 at $9.16.

August turns up on tight stocks, bucking the lower trend in the backs. Exporters and processors compete for soybeans to meet nearby commitments. Deferreds pressured by near perfect conditions for flowering and pod setting soybeans, falling crude, firmer dollar.

China's second state soybean sale ends with no bids. The China sale was rumored on Tuesday, sparking the CBOT to rally

CBOT-SOYOIL - August down 0.75 at 33.07 cents per lb. Lower crude oil, firm dollar and falling equities markets pressure soyoil.

Monsoon in India weakens, leading to potential limited rainfall in soybean areas over the next 5 days or longer.

FCPO-JAKARTA, July 29 (Reuters) - Malaysian crude palm oil futures fell 1.3 percent on Wednesday after hitting a one-week intraday high on profit taking as falling stock markets and crude oil prices dampened sentiment, traders said.

The benchmark October contract on Bursa Malaysia's Derivatives Exchange settled down 27 ringgit to 2,113 ringgit ($598.41) per tonne, after going as high as 2,158 ringgit early in the day, a level not seen since July 21. Overall volume was at 15,366 lots of 25 tonnes each.

REGIONAL EQUITIES-BANGKOK, July 29 (Reuters) - Major Southeast Asian stock markets fell on Wednesday, ending their recent rally, as investors took profits on banking shares such as Singapore's DBS Group, Thailand's Bangkok Bank and Malaysia's Public Bank.

Singapore's index <.FTSTI> lost 0.8 percent, snapping a four-session gain, with DBS Group , Southeast Asia's biggest lender, sliding 2.6 percent, Oversea-Chinese Banking Corp inching down 0.4 percent and United Overseas Bank dropping 2.9 percent. The three banks could post sharp declines in second-quarter profits, hit by bad debt charges and lower trading income. They release quarterly earnings on Aug. 3-7.

Malaysia's index <.KLSE> ended down 0.7 percent, with Public Bank down nearly 1 percent and palm plantation firm IOI Corp 2 percent lower.