US STOCKS-Wall St extends loss after report of gradual tax cuts

* House to consider five-year phase-in for corporate tax cut

* Apple up after bullish reports on iPhone X demand

* Manafort charged in U.S. Russia probe

* Merck dips after European application for Keytruda pulled

* Indexes down: Dow 0.39 pct, S&P 0.45 pct, Nasdaq 0.31 pct (Updates to early afternoon)

Oct 30 (Reuters) - U.S. stocks extended losses in early afternoon trading on Monday after a report that the House of Representatives was discussing "a gradual phase-in" for President Donald Trump's corporate tax cut plans.

The schedule would have the rate reach 20 percent in 2022, the Bloomberg report said. Under the plan, the rate may be reduced from its current 35 percent rate by three percentage points a year starting in 2018.

Stocks took a hit following the report as it seemed that the administration is watering down its tax cut proposals, said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Investors appeared to shrug off charges against Paul Manafort, a former campaign manager of President Donald Trump, and one of his affiliates - the first in connection with a probe into possible Russian meddling in the 2016 U.S. presidential election.

Earlier in the session, the Nasdaq Composite hit a record high after Apple shares jumped on research notes pointing to strong demand for the iPhone X.

The healthcare sector was under pressure after Merck dipped 6.13 percent, setting up the stock for its biggest two-day decline, after the company said it had withdrawn an application for European use of its key cancer immunotherapy.

With the third-quarter earnings season more than half-way through, nearly 74 percent of the S&P 500 companies that have reported earnings so far, have topped profit expectations, compared with 72 percent overall the past four quarters.

Investors also awaited the announcement on the nomination of the new Federal Reserve chief, expected on Thursday.

Trump is likely to pick Federal Reserve Governor Jerome Powell as the next chair of the U.S. central bank, a source familiar with the matter said on Monday.

At 12:23 p.m. ET (1623 GMT), the Dow Jones Industrial Average was down 90.63 points, or 0.39 percent, at 23,343.56, the S&P 500 was down 11.71 points, or 0.45 percent, at 2,569.36 and the Nasdaq Composite was down 21.10 points, or 0.31 percent, at 6,680.17.

Seven of the 11 major S&P indexes were lower, led by losses in healthcare, financials and consumer staples stocks.

Mondelez fell 2 percent ahead of its earnings report, expected after the bell.

General Motors dipped 3 percent after Goldman Sachs downgraded the company's stock to "sell" from "neutral".

Advanced Micro Devices slumped 8.15 percent after Morgan Stanley downgraded the stock to "underweight" from "equalweight".

Declining issues outnumbered advancers on the NYSE by 1,707 to 1,146. On the Nasdaq, 1,942 issues fell and 872 advanced. (Reporting by Sruthi Shankar; Editing by Saumyadeb Chakrabarty)