The Dow Jones industrial average dropped 50.92 points, or 0.38 per cent, to 13,384.29.
The S&P 500 lost 4.58 points, or 0.31 per cent, to 1,461.89 and the Nasdaq composite was 2.85 points lower, down 0.09 per cent, to 3,098.81.
Major bank stocks fell on news that JPMorgan Chase, Bank of America and others banks agreed to pay $US8.5 billion ($A8.16 billion) to settle federal complaints that they foreclosed on people who should have been allowed to stay in their homes.
In a separate agreement, Bank of America settled with the mortgage-servicing company Fannie Mae over mortgage investments that lost value during the real-estate crash.
Bank of America will pay Fannie Mae $US3.6 billion ($A3.45 billion) and buy back $US6.75 billion ($A6.48 billion) in loans that the North Carolina-based bank and its Countrywide unit sold from January 1, 2000 through to December 31, 2008.
LONDON - Europe's main stock markets fell as investors booked profits from big gains last week, but bank shares have surged after a top rule-setting body said it would relax its asset requirements for the sector.
At the beginning of the first full trading week in 2013, London's FTSE 100 index of leading companies lost 0.41 per cent to 6,064.58 points, Frankfurt's DAX 30 dropped 0.56 per cent to 7,732.66 points, and in Paris the CAC 40 fell 0.68 per cent to 3,704.64 points.
Europe's major banking companies shot higher, however, after the Basel Committee on Banking Supervision announced it would give banks and financial institutions more time to meet global liquidity rules scheduled to begin in 2015.
The rules are aimed at improving the banking sector's ability to survive any future financial crises.
The Basel committee - the world's top banking regulatory body - said it would relax the severity of new rules that will require banks to increase their holdings of assets that can be sold quickly in times of stress.
HONG KONG - Asian markets mostly fell as last week's gains prompted profit-taking, overshadowing Friday's Wall Street rally and upbeat US job creation figures.
The yen rose slightly against the dollar and euro, although it remains under pressure on expectations the Japanese central bank will further loosen monetary policy.
Tokyo - which on Friday hit its highest level since before the quake and tsunami of March 2011 - slipped 0.83 per cent, giving up 89.10 points to 10,599.01.
Seoul was flat, dipping 0.68 points to 2011.26.
Hong Kong also finished flat, dipping 1.34 points to 23,329.75, but Shanghai closed up 0.37 per cent, or 8.37 points, at 2,285.36, with traders optimistic about upcoming data, including inflation and trade figures, due out of Beijing soon.
WELLINGTON - New Zealand shares rose, pushing the NZX 50 Index to a new five-year high. With retirement village stocks setting the pace, the benchmark index gained 9.8 points, or 0.2 per cent, to 4,084.84, the highest since December 2007.
SYDNEY - The Australian share market is set for a flat start as world markets took a breather overnight following strong gains in the first few trading days of 2013.
At 0815 AEDT on the ASX 24, the March share price index futures contract was up five points at 4,697.
In economic news on Tuesday, the Australian Bureau of Statistics releases international trade in goods and services data for November.
The Australian Industry Group and the Housing Industry Association will also release their performance of construction index for December.
On Monday, the benchmark S&P/ASX200 index fell 6.5 points, or 0.14 per cent, to 4,717.3, while the broader All Ordinaries index dropped 4.8 points, or 0.1 per cent, to 4,738.1.
Oil prices seesawed around $US93 a barrel Monday, reflecting uncertainty about US crude stockpiles after an unexpected drop last week and what the Federal Reserve might do with its bond purchase program.
Benchmark crude rose 10 cents to finish at $US93.19 a barrel in New York. Brent crude rose 9 cents to end at $111.40 per barrel in London.
The impact of last week's release of a transcript of the Federal Reserve's December meeting showing that US policymakers disagreed over how long to keep a bond-purchase program in place was still being felt on the market.
Traders inferred the Fed might shorten the program, which could send US interest rates, and therefore the US dollar, higher. That in turn would hurt the price of oil. Oil, which is priced in US dollars, tends to fall as the dollar strengthens and makes crude more expensive for investors holding foreign currencies.
Base metals on the London Metal Exchange closed mostly lower after a lacklustrE session failed to lift most of the complex out of the bearish run suffered at the end of the previous week. At the close of open-outcry trading, flagship base metal copper closed 0.2 per cent lower at $US8,071 a metric ton. The red metal, alongside others, had managed to recover slightly from its intraday lows, likely on account of a stronger euro versus the dollar toward the session-end.
LME base metals are denominated in US dollars, and are thus more comparatively appealing to euro holders when Europe's common currency strengthens against the greenback.
In the immediate sessions ahead, the macro-economic data stream and headlines are likely to be relatively quiet until the latter half of the week.
Source: Netquote (www.netquote.com.au)