US STOCKS-Nasdaq loses ground as tech sector weighs

NEW YORK, Sept 15 (Reuters) - The Dow Industrials were edging higher while both the S&P 500 and Nasdaq were losing ground, as investors exercised caution ahead of the U.S. Federal Reserve's policy statement and prepared for Alibaba's initial public offering later in the week.

Alibaba Group (IPO-BABA.N) plans to increase the size of its U.S. initial public offering because of "overwhelming" investor demand, people familiar with the deal said, giving a short-lived push to shares of Yahoo (NasdaqGS: YHOO - news) , who owns a 23 percent stake.

Investors were also showing skittishness ahead of Wednesday's U.S. central bank policy statement, which will be parsed for hints on the timing of an interest rate hike.

"There is some nervousness out there so some money is coming out of the high flyers and some of it is people getting ready to raise some cash to put to work to Alibaba," said Ken Polcari, Director of the NYSE floor division at O'Neil Securities in New York.

"People are concerned (Fed Chair Janet Yellen) is going to talk about raising rates."

The Dow Jones industrial average was rising 9.89 points, or 0.06 percent, to 16,997.4, the S&P 500 was losing 5.58 points, or 0.28 percent, to 1,979.96 and the Nasdaq Composite was dropping 52.39 points, or 1.15 percent, to 4,515.21.

The largest percentage gainer on the New York Stock Exchange was DRDGOLD Limited (NYSE: DRD - news) , which was rising 15.97 percent, while the largest percentage decliner was Bankrate Inc (NYSE: RATE - news) , down 17.37 percent.

Among the most active stocks on the NYSE were Bank Of America, down 0.39 percent to $16.73; Nokia Corp ADR , up 2.99 percent to $8.62 and Petroleo Brasil, up 0.37 percent to $16.44.

On the Nasdaq, Yahoo Inc, up 0.3 percent to $43.03; Avanir Pharma, up 63.8 percent to $11.04 and Apple Inc (NasdaqGS: AAPL - news) , up 0.2 percent to $101.89 were among the most actively traded.

Declining issues were outnumbering advancing ones on the NYSE by 2,076 to 884, for a 2.35-to-1 ratio on the downside; on the Nasdaq, 2,078 issues were falling and 568 advancing for a 3.66-to-1 ratio favoring decliners.

The broad S&P 500 index was posting 11 new 52-week highs and 6 new lows; the Nasdaq Composite was recording 26 new highs and 68 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Chris Reese)