NEW YORK (AP) - Wall Street pulled back in erratic trading yesterday as investors grew more concerned about a deteriorating housing market and the widening impact of soured debt after Citigroup Inc. warned it plans to book $8 billion to $11bn in additional losses.

Citi's expected losses came on top of the $6.5bn in asset markdowns and other credit-related losses the company recorded in the third quarter. The re-emergence of credit concerns - like those that pummeled Wall Street this summer - comes as the market is also contending with concerns about housing and the health of consumer spending, and with rising expectations that the Federal Reserve is leaning away from cutting interest rates when it meets next month.

Meanwhile, a central banker's warning yesterday that the sub-prime mortgage market will likely deteriorate further added to the pressure on stock prices. Federal Governor Randall Kroszner told the Consumer Bankers Association Fair Lending Conference in Washington that "conditions for sub-prime borrowers have the potential to get worse before they get better."

The problems may be spreading. A Federal Reserve survey of banks showed that lenders are making it harder to get a home loan, even for borrowers with good credit. About 40 percent of respondents said they had tightened lending standards on prime mortgages during October, up from just 15 percent in July.

"We're at the point now where more and more evidence is starting to emerge that the next 12 months are going to be more difficult," said Joe Battipaglia, market strategist with Stifel Nicolaus & Co.'s private client group. "Problems in housing market are getting deeper and more treacherous," as home inventories rise and sale prices fall.

According to preliminary calculations, the Dow Jones industrial average fell 51.70, or 0.38 percent, at 13,543.40. The Dow was down nearly 150 points early in the session and briefly popped into the plus side in the late afternoon.

The late-session buying was likely the result of short covering, when traders buy stock to cover bets they made earlier that the market would decline. In short covering, traders are not looking to economics or other market fundamentals when they decide to buy.

"I think we're seeing a market that is probably absorbing all the negative news out of sub-prime and staying in a trading range now," said Peter Cardillo, chief market economist at brokerage house Avalon Partners Inc. "When we get down to certain technical levels, buying comes in and we're seeing that today."

Broader stock indicators also fell. The Standard & Poor's 500 index fell 7.48, or 0.50 percent, to 1,502.17, and the Nasdaq composite index fell 15.20, or 0.54 percent, to 2,795.18.

The Russell 2000 index of smaller companies fell 7.34, or 0.92 percent, to 790.45.

Bonds prices fell, with the yield on the benchmark 10-year Treasury note rising to 4.34 percent, up from 4.32 percent late on Friday.

A snapshot of the service sector appeared to briefly soften some investor concerns that the troubles in the financial sector would prove onerous enough to spill into other areas of the economy. The Institute for Supply Management said the service sector grew at a faster-than-expected pace in October amid strength in new orders.

The ISM's index gauging the health of non-manufacturing industries rose to 55.8 from 54.8 in September. A reading above 50 signifies economic expansion.

The unease over Citi's debt follows the widely expected decision by Charles Prince to resign as the company's chairman and chief executive at an emergency meeting of its board Sunday. Citi fell $1.83, or 4.9 percent, to $35.90 and was the steepest decliner among the 30 stocks that make up the Dow industrials.

Prince's resignation came less than a week after Stan O'Neal stepped down as CEO at Merrill Lynch & Co. Both Citi and Merrill have struggled with securities they hold that are tied to sub-prime loans, those made to borrowers with poor credit. A faltering housing market has made it difficult for those struggling with mortgage payments to refinance and pay off debts. Now, foreclosure rates are spiking and many banks are left holding loans worth far less than they had once been.

As it had Friday, Merrill Lynch fell amid concerns it would have to make an announcement of further write-downs. Last month, Merrill Lynch said it would write off $8.4bn in losses. Merrill fell $1.40, or 2.4 percent, to $55.88 after falling nearly eight percent Friday.

"Financials are struggling with this really unknowable and unending plague of asset quality," said John Merrill, chief investment officer at Tanglewood Capital Management in Houston. He expects that while the big financial houses will likely continue to book write-downs as homeowners default on their mortgages the stock prices of the financials are not likely to fall precipitously from where they stand.

Citigroup is down about 36 percent since the start of the year while Merrill Lynch is down about 40 percent.