* Stocks wipe out gains after initial optimism over Cyprus bailout
* Dell says Blackstone, Icahn offers may be superior
* Dow off 0.6 pct, S&P 500 off 0.5 pct, Nasdaq off 0.5 pct
By Angela Moon
NEW YORK, March 25 (Reuters) - U.S. stocks fell on Monday but pulled off their session lows by late afternoon after the president of the Eurogroup tried to clarify his comments on the Cyprus bailout.
Wiping out earlier gains that drove the S&P 500 index to less than a point away from its record close, stocks fell after Jeroen Dijsselbloem, who heads the Eurogroup of euro-zone finance ministers, told Reuters and the Financial Times that when failing banks need rescuing, euro-zone officials would turn to the bank's shareholders, bondholders and uninsured depositors to contribute to their recapitalization. He also said that Cyprus was a template for handling the region's other debt-strapped countries.
But stocks came off their lows after Dijsselbloem clarified his previous comments and said, "Cyprus is a specific case with exceptional challenges, which required the bail-in measures we have agreed upon yesterday. Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used."
Banking shares were among the day's top decliners. Shares of Morgan Stanley fell 0.8 percent to $22 while Bank of America dropped 1.4 percent to $12.38.
The Dow Jones industrial average was down 90.88 points, or 0.63 percent, at 14,421.15. The Standard & Poor's 500 Index was down 8.43 points, or 0.54 percent, at 1,548.48. The Nasdaq Composite Index was down 15.06 points, or 0.46 percent, at 3,229.93.
At its session high, the Dow climbed as high as 14,563.75, a record intraday high, while the S&P 500 came within a fraction of a point of its record closing high of 1,565.15 set in October 2007.
"There was certainly a sigh of relief that a deal was reached, but there are still growing concerns that more work needs to be done," said Jack Ablin, the chief investment officer of BMO Private Bank in Chicago.
The CBOE Volatility Index, known as the VIX, Wall Street' favorite barometer of investor anxiety, was up 4.8 percent at 14.22, off its intraday high of 14.61.
In company news, Dell Inc said it received alternative proposals from Blackstone and billionaire investor Carl Icahn that could be superior to the $24.4 billion offer from founder Michael Dell and private equity fund Silver Lake Partners last month. Dell shares rose 2.9 percent to $14.55.
Merger and acquisition activity has been among the reasons for stocks' stellar performance so far this year.
Shares of University of Phoenix owner Apollo Group rose 6.9 percent to $18.22 after the company reported a better-than-expected profit even as student sign-ups fell for the fourth straight quarter. The stock was the S&P 500's biggest percentage gainer.
Best Buy Co Inc shares rose 1.5 percent to $23.12 after the company said that founder Richard Schulze would rejoin the consumer electronics retailer as chairman emeritus and add two of his former colleagues to the board. The news helped dispel rumors that the largest investor in the world's largest consumer electronics chain was contemplating selling his stake in the company.