U.S. MARKET AVERAGES

Stock averages opened in the negative on profit taking following the Dow’s Monday close at four-and-a-half-years peak of 11,011 and disappointing earnings reports from major companies like Alcoa, Phelps Dodge and Guidant Corp.

After the closing bell Monday Alcoa Inc (AA: chart), the world's biggest aluminum producer, kicked off the fourth-quarter earnings season. The company’s quarterly results disappointed and the stock slipped 4.7% in Frankfurt trade after it reported a 16% Q4 earnings drop to 24 cents a share vs. 39 cents a year ago, missing estimates of 37 cents a share. The Dow component posted a sharply lower fourth-quarter profit due to a long list of production outages, strikes and restructuring costs.

Copper producer, Phelps Dodge cut its Q4 earnings outlook from the range of $4.15 to $4.40 sharply down to the range of $1 to $1.30 a share, citing higher copper prices, production and sales decrease.

Guidant Corp. (GDT: chart), medical device manufacturer, announced that its Q4 sales would fall by 15% in comparison with the year-ago period.

Cyclical stocks fell on Alcoa's disappointing earnings report and Phelps Dodge's lowered forecast, with the Morgan Stanley Cyclical Index falling about 1.2%. The gold sector declined by 1.3% in early trading.

Energy stocks extended gains, including a 2.1% advance in the oil service sector. Retail stocks remain strong as well. The semiconductor sector slightly recovered to move into positive territory.

Accentia Biopharma (ABPI: chart) was a notable gainer in the early going after it revealed positive data for a phase II trial of an anti-cancer vaccine, BiovaxID. The stock rose more than 50%.

Lifepoint Hospitals (LPNT: chart) was one of the most conspicuous losers after it gave 2006 guidance that was below analysts' expectations. The stock slipped 15%.

In the first hour of trading, the Dow Jones industrial average fell 44.16, or 0.4%. The Standard & Poor's 500 index fell 4.23, or 0.33%, and the Nasdaq composite index fell 9.74, or 0.42%.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.40% from 4.38% late Monday.

INTERNATIONAL MARKETS NEWS

Most Asian-Pacific benchmarks lost ground Tuesday, posting heavy losses on worries that recent rally may have gone too far, especially currency-rate gains with exporter issues benefiting from them. The decliners were led by The Nikkei which tumbled 1.9% to 16,124.35, followed by South Korea’s Kospi, down 0.9%, and Taiwan’s Weighted index, down 0.5%. China’s Shanghai Composite and Hong Kong’s Hang Seng reversed from recent weakness to finish higher by 0.4% each.

European stocks were weak at mid-day dealings with investors selling sensitive stocks like insurers after the Dow Jones Industrial average crossed the 11,000 level for he first time in four years and a half. The German DAX 30 lost 0.3%, the French CAC 40 slipped 0.3%, and London’s FTSE 100 declined 0.2%.

OIL, METALS, CURRENCIES

Crude oil prices advanced on worries that giant oil-producer Iran will be pressured by Western countries in connection with nuclear fuel. Light sweet crude for February delivery gained 50 cents to $64 a barrel. Gasoline slightly fell to $1.7665 a gallon. Heating oil traded up to $1.7715. Natural gas added 3 cents to $9.387 per 1,000 cubic feet. London Brent rose 49 cents to $62.50.

European gold climbed on inflation worries and weaker dollar against the yen. In London gold rose to $545.25 per troy ounce from $541.50. In Zurich the precious metal advanced to $546.78 from $541.55. In Hong Kong gold climbed $4.50 to close at $546.50.

The U.S. dollar traded mixed against major currencies. The euro was quoted at $1.2075, down from $1.2083. The dollar bought 114.25 yen, down from 114.35. The British pound traded at $1.7664, up from $1.7645.

EARNINGS NEWS

Guidant Corp. (GDT: chart), medical device manufacturer, announced that its Q4 sales would fall by 15% in comparison with the year-ago period. Quarterly defibrillator sales in the U.S. and worldwide would decline 23% and 19%, though the sales level remained above Guidant''s previous outlook.