By Duncan Martell 1 hour, 20 minutes ago

SAN FRANCISCO (Reuters) - Apple Inc
(AAPL.O) shares fell as much as 5 percent on Monday ahead of a highly
anticipated event on Tuesday when the maker of the Mac, iPod and iPhone
is expected to roll out a new iPod Nano and may give an update on
iPhone sales.
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Stock in the high-flying company often sells off ahead of its major product announcements, said Shannon Cross, an analyst at Cross Research, adding that concerns about the strength of overall consumer spending also weighed on Apple shares.

The Cupertino, California-based company e-mailed reporters and analysts last week with an invitation to a San Francisco event entitled "Let's Rock," which bore an image of an iPod- wearing man jumping in the air, with the words "playing soon."

Analysts said ahead of the event that they expected more incremental updates to the iPod line. Cross said some may have been expecting new versions of their laptop line, but those may not be announced on Tuesday.

"Right now Apple
stock is kind of caught between concerns about strength in the consumer
market and questions about how quickly they will be refreshing products
and what they will announce tomorrow," Cross said. "It is kind of a buy on the rumor sell on the news kind of stock. Apple often sells off ahead of their announcements."

Analyst Shaw Wu of American
Technology Research said in a note to clients: "While there is always
room for surprise, it seems this event may be somewhat underwhelming vs
previous expectations and events."

He said his checks in the industry suggested the event will be focused mainly on the market-leading iPod, which in a sense was Apple's coming out as a consumer electronics company, known for more than just its iconic Mac computers.

"This may be viewed as disappointing as some were hoping to see new Macs," Shaw wrote.

Cross said Wall Street analysts and investors will also be looking for an update on how many of its iPhone 3G smart phones it has sold.

The much anticipated launch of the iPhone 3G in July was marked in some cases by delays in activating them and reports of dropped calls and spotty third-generation (3G) wireless networks. Apple last month released a software update to fix the problem.

"The Street is going to be looking for some kind of update on the iPhone," Cross said.

Apple shares were down $6.56, or 3.9 percent, to $153.62 in midday trading. Those of smart-phone competitor Research in Motion Ltd (RIM.TO), maker of the Blackberry smart phone, fell 5.5 percent to $106.99.

"It's not just Apple, it's the end market in general," Cross said