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DJI-NEW YORK, July 25 (Reuters) - U.S. stocks dipped on Monday as lawmakers remained in a standoff over raising the debt ceiling to avoid default, but investors were convinced a compromise will be reached before next week's critical deadline.

Trading volume, however, was light even for a seasonally quiet period, suggesting investors were holding to the sidelines. In another sign of negative sentiment, declining stocks far outpaced advancers despite the day's moderate declines.

Lawmakers are facing an Aug. 2 deadline to raise the $14.3 trillion debt ceiling to avert a U.S. default.

The Dow Jones industrial average .DJI was down 88.36 points, or 0.70 percent, at 12,592.80. The Standard & Poor's 500 Index .SPX was down 7.59 points, or 0.56 percent, at 1,337.43. The Nasdaq Composite Index .IXIC was down 16.03 points, or 0.56percent, at 2,842.80.

NYMEX-NEW YORK, July 25 (Reuters) - U.S. crude oil futures ended lower on Monday as investors turned cautious due to stalled talks in Washington over a deal to raise the government debt limit to avoid a default by Aug. 2.

Trading volume was 41 percent below the 30-day average, suggesting investors were keeping to the sidelines as Washington debates the debt ceiling.

On the New York Mercantile Exchange, crude for September delivery CLU1 settled at $99.20 a barrel, falling 67 cents, or 0.67 percent, after trading from $98.52 to $99.87.

CBOT-SOYBEANS-Soybean futures on the Chicago Board of Trade fell 1.2 percent on the biggest single-day drop since June 30, on improved crop weather and worries over U.S. debt, traders said.

Grains and other commodities pressured as the inability of the U.S. Congress to reach agreement on raising the government debt limit kept investors wary of risky assets and concerned about the global economy.

FCPO-KUALA LUMPUR, July 25 (Reuters) - Malaysian palm oil futures dropped on Monday as traders booked profit after pricing in firm exports and eyed growing concerns of a U.S. debt default that may slow global economic growth and demand.

The palm oil market has been choppy in the past few days and could come under more pressure due to mounting worries about U.S. debt. The market has lost more than 18 percent so far this year on higher production in top suppliers Indonesia and Malaysia.

The benchmark October crude palm oil contract KPOc3 on Bursa Malaysia Derivatives had fallen 1.3 percent, or 40 ringgit, to 3,100 ringgit ($1,042.017) per tonne.

Overall traded volume rose to 27,685 lots of 25 tonnes each from the usual 25,000 lots.

REGIONAL EQUITIES-BANGKOK, July 25 (Reuters) - Southeast Asian stock markets were mostly flat to lower on Monday as concern over a potential U.S. debt default hurt sentiment, but investors bought banks, seen as the best bet in a region where interest rates are on the rise.

Regional equities were subdued as debt talks continued in Washington, keeping investors nervous ahead of a deadline of Aug. 2. Stocks in Indonesia .JKSE, which struck record highs last week due to foreign inflows, edged down 0.5 percent.

Singapore .FTSTI and Malaysia .KLSE also edged slightly lower, while Thailand .SETI, the Philippines .PSI and Vietnam .VNI recouped early losses to end in positive territory.

Trading volume was generally moderate to weak, the most active market being Indonesia with 1.6 times its 30-day average, but turnover in Singapore and Malaysia fell to around 0.8 times their 30-day average.

Brokers say economic growth in Asia has been relatively resilient to U.S. and European troubles, making Asia's outlook promising, but markets in the region may be choppy in the short term due to the negative impact of the U.S. debt crisis.

CIMB Securities is positive on Southeast Asia, with an overweight rating on Indonesia as its strong economic fundmentals bode well for corporate earnings.