CHICAGO (Dow Jones)--Chicago Mercantile Exchange hogs settled lower Thursday on fund selling, sell stops and bearish fundamentals.

Pork bellies, live cattle and feeder cattle finished well into bearish trading territory.

Lean hogs began the morning in negative fashion after weakness from futures' on Wednesday spilled over into Thursday. Prospective longs kept their distance following Thursday evening's pork cutout drop that took a bite out of pork packer profit margins.

Meanwhile, the U.S. stock market's fall, Chicago Board of Trade corn's setback and higher U.S. dollar conspired to bring down distant lean hog contracts.

Cash hog prices on Thursday for the most part came in flat to weak as processors work through abundant supplies.

Also, packers will pressure cash bids heading into the weekend unless something "miraculous" happens with pork cutout prices overnight, a hog broker said.

While some traders are expected to square positions on Friday, others will keep tabs on CME's hog index heading into spot-month expiration on Oct. 14.

October hogs ended 65 points lower at 49.42 cents a pound, and December closed 97 points lower at 48.62 cents.

Pork bellies closed moderately lower on lean hog selling and sizable daily hog slaughters that could undermine fresh belly prices. Sell stops and chart-related selling developed after February earlier fell through 10-and-40 day moving average support levels.

February pork bellies closed down 45 points at 81.25 cents a pound. March was unquoted. May ended 55 points lower at 82.55 cents.

Cattle Complex

CME live cattle closed lower on fund selling, sell stops and bear positioning.

Live cattle slipped at first after short-term longs claimed profits. Receding boxed beef prices and unprofitable beef packer profit margins kept prospective bulls on the sidelines and jeopardize this week's potential cash cattle price outcome.

The latest operating margin index for beef packers was minus $11.65 per head, compared with minus $1.75 the previous day, as calculated by HedgersEdge.com.

The U.S. Department of Agriculture midday Thursday boxed beef item showed choice items down $1.04 per hundredweight, and select cuts dropped $0.81.

Spot-October and nearby-December live cattle took a decidedly downward ark following word that cattle in Nebraska on Wednesday moved at lower prices than last week.

Plus, a few minuets after live cattle closed at 2:00 EDT, there were reports of $83 per hundredweight cash-basis fed cattle sales versus with mostly $84.50 last week.

Meanwhile, the U.S. dollar's upswing and U.S. stocks' downturn curbed back-month cattle buying enthusiasm.

Cattle market participants on Friday will settle their accounts before the weekend. Bulls and bears will digest fed cattle business so far this week while awaiting news regarding cattle left to be sold.

October live cattle ended 150 points lower at 84.10 cents a pound, and December closed 115 points lower at 84.97 cents.

CME feeder cattle closed lower on profit taking, sell stops and live cattle letdown. Spreaders sold January and bought October.

And speculative buyers were leery of futures' premium to CME's feeder cattle index.

October feeder cattle settled 155 points lower at 94.95 cents, and November closed 170 points lower at 94.92 cents.

-By Theopolis Waters; Dow Jones Newswires; 312-341-5778; theopolis.waters@dowjones.com