Caution sets in on Wall St ahead of UK vote, ECB, Comey testimony

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks edged lower on Tuesday as traders shied away from risk ahead of major political and economic headlines expected on Thursday.

Britain's general election as it maps its exit from the European Union, the European Central Bank's policy meeting and former FBI Director James Comey's testimony before a Senate panel could all affect investor sentiment.

Comey was investigating whether Donald Trump's presidential campaign and Russia colluded to sway the 2016 U.S. election when he was fired by Trump in May. His testimony could dampen already flagging momentum for the U.S. President's agenda of rolling back regulations and overhauling the tax code.

British Prime Minister Theresa May looks on course to increase her parliamentary majority, an opinion poll showed on Tuesday, shortly after another survey suggested the race with the opposition Labour Party was neck and neck.

Investors will also watch out for the European Central Bank's meeting, where policymakers are expected to take a more benign view of the economy, according to sources.

"We have a lot of stuff on Thursday. If you're looking for days where we can see some long-awaited volatility, I'd say that's probably going to be Thursday and Friday," said Anthony Conroy, president at Abel Noser in New York.

"You got to position yourself to whatever could happen Thursday so you take a little bit off the table."

The Dow Jones Industrial Average fell 24 points, or 0.11 percent, to 21,160.04, the S&P 500 lost 2.53 points, or 0.10 percent, to 2,433.57 and the Nasdaq Composite dropped 0.02 points to 6,295.67.

Safe-havens were bid up as as traders sold out of stocks. Spot gold rose 0.9 percent and touched its highest in nearly seven weeks while U.S. 10-year Treasury yields touched a session low of 2.129 percent, their lowest level since the days following the November U.S. Presidential election.

The largest weight on the S&P 500 was Walmart , down 1.7 percent at $78.93 after Amazon said it would offer its Prime subscription service at a discount to U.S. customers on government aid, taking aim at Walmart's key customer base. Amazon shares fell 0.1 percent.

Macy's dropped 6.9 percent to $22.21 after it warned its margins could shrink further.

The news hit other department stores: J.C. Penney dropped 4.0 percent, Sears fell 2.1 percent and Nordstrom slid 3.4 percent.

Advancing issues outnumbered declining ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 82 new highs and 70 new lows.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)