(Updates with losses extended)
NEW YORK, March 24 (Reuters) - Stocks extended their big losses early on Monday as investors pulled back from last week's rally, reminded by grim television footage from Iraq that toppling Saddam Hussein will not be easy for the U.S.-led forces there.
The blue-chip Dow Jones industrials fell 260.79 points, or 3.06 percent, to 8,261.18 and the broad Standard and Poor's 500 index lost 27.18 points, or 3.03 percent, at 868.72. The tech-laced Nasdaq Composite Index sank 42.61 points, or 3 percent, to 1,379.23.
"Monday marks a time for market reassessment of the situation in Iraq and with weekend news events getting time to sink in," said John Simon, futures analyst at TradeSignals.com. "The outlook for the war is getting murkier by the hour and prices are declining as a result."
Over the weekend, U.S.-led forces suffered their heaviest casualties so far, with stiff resistance from Iraqi soldiers at several towns as the push toward Baghdad continued.
Iraqi television footage of American prisoners of war gave pause to investors who were betting on a lightning-fast U.S. victory. The blue-chip Dow had risen a hefty 13 percent in an eight-day rally.