US stocks pared earlier losses but remained in negative territory in mid-morning trade on Monday, the last trading day of the year, as investors digested fresh data on the housing market.

The data from the National Association of Realtors, showed the pace of existing US home sales edged up in November to a 5m-unit annual rate and the median price fell from a year earlier.

The trade group also urged the US Federal Reserve to slash interest rates by as much as three-quarters of a percentage point in January as a way to embolden home buyers. Most analysts expect a quarter-point cut,

Over the last 12 months, existing home sales have plunged 20 per cent, underscoring the troubles in the housing sector.

The national median existing home price for November fell 3.3 per cent from a year earlier to $210,200.

The S&P 500 index was 0.4 per cent down at 1473.38, while the Nasdaq Composite was also 0.4 per cent lower at 2,664.5. The Dow Jones Industrial Average was 0.3 per cent lower at 13,328.07. All three had been lower before the release of housing data.

Bond markets are scheduled to close at 2pm eastern time, while equity markets are set for a full session.

Despite turmoil in the credit markets, US stocks looked set to finish 2008 higher. Over the year to date, the Dow Jones Industrial Average is up about 7 per cent, the S&P 500 is up about 4 per cent, and the Nasdaq is up nearly 11 per cent.

In corporate news, Kirk Kerkorian's Tracinda is paying $684m for a 35 per cent stake in Delta Petroleum Corporation, an independent energy exploration company. Delta Petroleum shares soared 21.7 per cent to $18.87.

Chinese search engine Baidu.com announced that its chief financial officer had died in an accident while on holiday in China. Its shares were 0.8 per cent lower at $395.50.

The Semiconductor Industry Association said November chip sales rose 2.3 amid steep cost cutting, and annual sales may fall short of previous predictions. As a result, Intel (NASDAQ:INTC) rose 0.6 per cent to $26.92 and shares in Advanced Micro Devices (NYSE:AMD) were also 0.6 per cent higher at $7.36.

Most Asian markets posted strong gains. In Pakistan, stocks tumbled 5 per cent on Monday as markets reopened after the assassination of opposition leader Benazir Bhutto last week. European markets got off to a mixed start and were set for an early close.