U.S. MARKET AVERAGES

U.S stocks have kept trading near the flat line with the Dow currently posting modest gains and the S&P 5000 sitting near the flat mark. Market was dragged down by falling oil prices which sent energy shares down. Another distinguished player was drug maker Johnson & Johnson which was sued by medical-device maker Guidant Corp. to force completion of a $25 billion merger of the two companies.

The gaming sector is currently up 1.4%, extending last week''s gains, ticking to a 7-week high. The leader in the group is Isle of Capri Casinos (ISLE: chart), rising by more than 9%. The housing sector has been volatile through the morning session. The space has ticked to the upside, jumping above its morning trading range to reach an intraday high.

With a further decline in oil prices energy stocks remain the worst performers. The disk drive sector has weakened through most of the morning and now is posting a loss of over 1.1%.

Google (GOOG: chart) has extended its 52-week high and is within $4 of the $400 mark. THQ Inc. (THQI: chart) has jumped to the upside, breaking above a recent trading range and above resistance to reach a fresh peak.

Guidant (GDT: chart) has further slipped on news that it has sued J&J (JNJ: chart) to force the merger between the companies, setting a new 52-week low. Comcast (CMCSA: chart) has also ticked to a fresh nadir, moving below a recent range.

Shares of oil majors like Exxon Mobil Corp. (XOM: chart) and ConocoPhillips (COP: chart) dropped as crude oil further declined on mild weather forecasts and eased fears over fuel supplies.

Natural gas producer El Paso Corp (EP: chart) also fell on a larger third-quarter loss, hurt by a large charge and declining revenue.

Among rising shares, utility company TXU Corp. (TXU: chart) said it would split its stock, buy back shares and sharply boost its dividend.

Dutch information and media company VNU said on Monday it is in talks with U.S. health-care data firm IMS Health that could terminate their $7 billion merger deal after a shareholder revolt.

MOVERS AND SHAKERS

The software giant Microsoft (MSFT: chart) has appeared to be the main participant in the talks about the possible sale of a stake in America Online, a Time Warner (TWX: chart) unit, according to The New York Times. Microsoft’s stock added 0.2% and Time Warner’s stock was up 0.6%.

Tivo (TIVO: chart) and Yahoo (YHOO: chart) plan to make an agreement that will connect Yahoo''s online service to TiVo''s set-top boxes, according to The New York Times. Tivo’s stock jumped 13% and Yahoo’s stock gained almost 1%.

The search engine Google (GOOG: chart) is modifying some of its internet services for use on wireless devices. Starting today users of more than 100 types of cell phones can access Google''s map database, according to a Wall Street Journal report. The company’s shares were up about 4%.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks fell across the region on consolidation of last-week gains. The Nikkei declined 0.1% but still held above 14,000 on cautious trading. Among the other regional markets, Hong Kong’s Hang Seng was the biggest loser, down 1.5%, followed by Singapore’s Straits Times, falling by 0.6%, and South Korea’s Kospi, down 0.3%. China’s Shanghai Composite slightly advanced on a tentative agreement between China and U.S, while the Indian market rose 1.7%.

European markets closed in the green on deal talk, stronger dollar and falling oil prices. The German DAX 30 added 0.6%, London’s FTSE 100 advanced 0.7%, and the French CAC 40 added only 0.1% as gains were limited by oil major Total and insurance stocks.The euro fell to an 18-month low below $1.18.

OIL, METALS, CURRENCIES

Crude oil prices slid below $59 a barrel on unusually warm weather and easing worries about the winter season heating fuel demand. Light sweet crude December delivery fell to $58.60 a barrel. Heating oil lost 4 cents to $1.755 a gallon. Gasoline fell 7 cents to trade at $1.542. Natural gas dropped 2%, or nearly 24 cents to $11.18 per 1,000 cubic feet.

Gold traded higher in Europe. In London the precious metal closed at $456.85 per troy ounce, up from $456. In Zurich gold rose to $457.65 from $455.85. In Hong Kong gold fell $4 to close at $457.45. Silver closed at $7.46, down from $7.49.