Singapore Stocks-Down on weak U.S. outlook; limited upside seen

* Index down 0.68 pct, expected to be range-bound after break

* Yangzijiang up on $915 million contract wins

* Property firms down second day in a row

By Eveline Danubrata

SINGAPORE, Aug 31 (Reuters) - Singapore shares fell on Tuesday for the first time in three days, hit by weakness in U.S. shares and selling in local property stocks following fresh moves by the government to cool a red-hot residential market.

Investors are expected to stay in the sidelines in the near term amid uncertainty about the U.S. economic outlook and the August U.S. payrolls report on Friday is likely to set future direction for the market. [ID:nTOE67U02Q]

By the lunch break, the Straits Times Index (STI) .FTSTI was down 0.69 percent at 2,936.74. Nearly 194 million shares had changed hands.

"Everybody is kind of worried about the economic recovery in the U.S. This week we have pretty important economic numbers, especially the jobless numbers, coming from the U.S. so the market is a bit cautious," said Carey Wong, an investment analyst at OCBC Research.

"I think the stock market is waiting for the real economy to play catch-up, but the evidence is starting to show that maybe the economy is not as rosy as what people think," Wong said.

Local dealers expect the market to trade sideways within a range of plus minus 20 points after the break.

Shares of Singapore-listed shipbuilder Yangzijiang Shipbuilding (YAZG.SI) rose as much as 4.5 percent after it said it had won 28 shipbuilding contracts worth $915 million. [ID:nSGE67U00W]

Yangzijiang shares were trading at S$1.60, up 3.2 percent, at midday. More than 46 million shares had changed hands.

Shares of Singapore property developers fell for the second day in a row after the government announced measures to cool the city-state's red-hot market [ID:nSGE67U01Y].

City Developments (CTDM.SI), which fell 3.3 percent by midday, led losers among property shares.

(Reporting by Eveline Danubrata; Editing Saeed Azhar)