* Oil prices slide more than 3 pct to near $64 a barrel
* U.S. Service sector contracts at slower pace in June
* Dow off 0.8 pct, S&P off 0.9 pct, Nasdaq off 1.4 pct (Updates to midmorning)
By Leah Schnurr
NEW YORK, July 6 (Reuters) - U.S. stocks fell on Monday as investors worried about the potential strength and timing of an economic recovery, sending oil prices and energy shares lower.
Markets briefly cut losses after data showed the U.S. service sector contracted at a slower pace in June, blunting some pessimism over the economy after a last week's much worse-than-expected jobs report.
"Overall the data looks like a positive, although it may not be enough in the near term to overcome last week's disappointing jobs report," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
Oil touched a five-week low and fell to around $64 a barrel, sending Exxon Mobil Corp down 2.1 percent at $67.05, and Chevron Corp fell 2.1 percent to $63.09. The two companies were the biggest weights on the Dow Jones industrial average.
Although the weaker oil prices bode well for recession-weary consumers, strong commodity prices have been viewed as a signal the global economy is stabilizing.
The Dow Jones industrial average fell 63.86 points, or 0.77 percent, to 8,216.88. The Standard & Poor's 500 Index lost 8.45 points, or 0.94 percent, to 887.97. The Nasdaq Composite Index gave up 24.56 points, or 1.37 percent, at 1,771.96.