Trader's Highlight

DJI-NEW YORK, July 18 (Reuters) - U.S. stocks dropped on Monday as bank shares bore the brunt of investor frustration over governments' inability to solve debt crises in the United States and Europe.

With five days to go before President Barack Obama's deadline for a debt ceiling deal and no agreement in sight, Republicans and Democrats were crafting a fallback plan to avert a U.S. default.

The Dow Jones industrial average .DJI dropped 94.57 points, or 0.76 percent, to 12,385.16. The Standard & Poor's 500 Index .SPX declined 10.70 points, or 0.81 percent, to 1,305.44. The Nasdaq Composite Index .IXIC fell 24.69 points, or 0.89 percent, to 2,765.11.

NYMEX-NEW YORK, July 18 (Reuters) - U.S. crude futures fell more than 1 percent on Monday on worries about the stalled debt-limit negotiations among Washington policymakers and as the debt crisis in the euro zone was feared worsening further.

Worries about the euro zone debt situation caused the euro to fall against the dollar, which rose against a basket of currencies.

On the New York Mercantile Exchange, crude for August delivery CLc1 settled at $95.93 a barrel, down $1.31, or 1.35 percent, after trading between $94.69 to $97.69.

CBOT-SOYBEANS-U.S. soybean futures on the Chicago Board of Trade closed mostly lower on forecasts for slightly less threatening heat in the Midwest crop belt, traders said.

Relief from extremely hot temperatures in the U.S. Corn Belt is expected by late this week as a high-pressure ridge breaks down, allowing cooler and damper weather into the crop-growing region - World Weather Inc.

FCPO-KUALA LUMPUR, July 18 (Reuters) - Malaysian palm oil futures fell 1.2 percent on Monday as weaker overseas soy complex weighed on market sentiment at the time when stocks are growing.

Palm oil inventories in the world's No. 2 producer hit 18-month highs in June as strong production due to favourable weather outpaced sluggish overseas demand. Traders expected stocks in July to stay above 2 million

The benchmark October crude palm oil contract KPOc3 on Bursa Malaysia Derivatives settled down 37 ringgit to close at 3,078 ringgit ($1,024) per tonne.

Overall traded volume was 22,876 lots of 25 tonnes each, below the usual 25,000 lots.

REGIONAL EQUITIES-COLOMBO, July 18 (Reuters) - Stocks in Indonesia and the Philippines closed at record highs on Monday, outperforming most of their Southeast Asian peers, despite worries about mounting U.S. and euro zone debt problems which are driving investors from riskier assets in much of the rest of the world.

While many investors scaled back activity amid the global uncertainty, other remained positive on fast growing regional economies such as Indonesia .JKSE and the Philippines .PSI, which saw $36 million and $9.8 million of foreign inflows during the day, respectively.

Key stock indexes in Malaysia .KLSE and Singapore .FTSTI closed 0.9 percent and 0.2 percent lower, respectively.