US STOCKS-Retailers could be acquisition targets: Morgan Stanley

* Indexes off: Dow 0.5 pct, S&P 0.8 pct, Nasdaq 1.3 pct

By Ryan Vlastelica

NEW YORK, Sept 22 (Reuters) - Retail stocks were lower on Monday, dropping along with weakness in the broader market, but Morgan Stanley (Xetra: 885836 - news) sees a higher-than-average likelihood that many stocks in the sector could receive acquisition offers in the coming year.

The firm sees nine consumer discretionary stocks that rank high in its acquisition likelihood model, the most of any sector, although the consumer staples, healthcare and technology groups were also seen as offering potential candidates.

Among retailers, Abercrombie & Fitch Co (NYSE: ANF - news) , J C Penney Co and American Eagle Outfitters Inc (NYSE: AEO - news) were all seen as having a high possibility of receiving an offer, although the model does not consider the likelihood of an offer being accepted or closed.

Morgan Stanley's model, which looks at companies with market caps over $2 billion and year-to-date trading volume of $3 billion, considers 10 factors, including dividend yields, debt levels and price-to-book ratios.

Index snapshot at 12:30 EDT:

* S&P 500 was falling 16.7 points, or 0.83 percent.

* Nasdaq Comp was losing 59.31 points, or 1.29 pct.

* Dow industrials was dropping 80.6 points, or 0.47 pct.

* Russell 2000 was falling 16.91 points, or 1.47 pct.

* S&P MidCap was dropping 18.01 points, or 1.27 pct.

* S&P SmallCap was losing 7.86 points, or 1.19 pct. (Editing by Nick Zieminski and Andre Grenon)