US STOCKS-Wall St drops as banks fall on credit jitters

(Updates with market dropping)

NEW YORK, July 14 (Reuters) - U.S. stocks fell on Monday as fears of more credit crisis fallout hit bank stocks, overshadowing the government's proposed rescue plan for mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N).

The KBW bank index .BKX slid more than 7 percent.

The Dow Jones industrial average .DJI declined 52.59 points, or 0.47 percent, to 11,047.95. The Standard & Poor's 500 Index .SPX fell 9.65 points, or 0.78 percent, to 1,229.84. The Nasdaq Composite Index .IXIC tumbled 24.08 points, or 1.08 percent, to 2,215.00. (Reporting by Ellis Mnyandu; Editing by Kenneth Barry)