U.S. MARKET AVERAGES

Climbing oil prices and disappointing sales reports from some retailers kept stocks under pressure Thursday morning.

In Nigeria threats of renewed violence pushed up oil prices, hurting the outlook for U.S. corporate profits and consumer spending. Crude oil futures were up 78 cents to $62.75 in electronic trading.

Several chain stores reported disappointing sales last month due to lower consumer spending on snowstorm and freezing temperatures in the Northeast.

Gap announced same-store sales decline of 11%. Talbot posted 6% sales drop. Bebe had a 1.6% gain in same-store sales, below the 4.6% estimate. New York & Company Inc. reported a decline in February same-store sales and gave a sales and earnings outlook for Q1 that fell far below analysts'' estimates.

Among retailers posting strong results, Costco reported 7% same-store sales growth, Nordstrom comparable store sales rose 4.9%, and Wal-Mart sales increased 3.2%.

Ciena (CIEN: chart) jumped to a new 52-week high on quarterly results. JDS Uniphase (JDSU: chart) jumped above a trading range, moving to a new peak. Broadcom (BRCM: chart) set a fresh peak, extending gains.

Dana Corp. (DCN: chart) fell to a new 52-week low, as news that it missed a bond interest payment sent its shares down 30%. Fellow auto parts maker Lear (LEA: chart) also set a new low. Gateway (GTW: chart), which revealed Wednesday that it settled a patent dispute with HP (HPQ: chart), extended its low with a drift lower.

In midday trading, the Dow Jones industrial average fell 40.03, or 0.36%. The Standard & Poor's 500 index lost 3.69, or 0.29%, and the Nasdaq composite index dropped 6.84, or 0.3%.

Bonds fell for a second straight session, with the yield on the 10-year Treasury note rising to 4.65% from 4.59% late Wednesday.

MOVERS AND SHAKERS

Versant Corp (VSNT: chart), database-management company, reported Q1 net income of 22 cents a share, compared with 10 cents in the year-earlier period. Revenue fell to $4.6 million from $5.3 million. The stock surged to 50%.

MatrixOne (MONE: chart) surged after France's Dassault Systemes said that it was buying the business software company for $408 million, or $7.25 a share in cash. The per share bid represents a 21% premium to MatrixOne's Wednesday closing price of $6.01. The stock climbed 19%.

PetSmart (PETM: chart) reported Q4 net income rise of 50 cents a share compared with a restated 43 cents in the year-earlier period. The company’s shares rose 10%.

Dana Corp (DCN: chart), auto-parts company, said it did not make the March 1 interest payments on its 7% senior notes due March 1, 2029, and its 6.5% senior notes due March 1, 2009. The total amount of the interest payments was $21 million. The company said there is a 30-day grace period on the interest payments. Failure to make the payments by March 31 would constitute a default. The stock plunged 31%.

Nastech Pharmaceutical (NSTK: chart) said it's reacquiring the rights to PYY3-36, a nasal spray for the treatment of obesity, from its cooperation partner Merck & Co. and will advance its clinical development. Merck's agreement with Nastech has expired and the drug giant said the nasal formulation has not shown itself to be effective in early testing. The stock plunged 36%.

ECONOMIC NEWS

The Department of Labor reported that the initial jobless claims in the week ended February 25 rose to 294,000 from the previous week''s revised figure of 279,000. Economists had expected jobless claims to rise to 285,000 compared to the 278,000 originally reported for the previous week.

Despite the increase, initial jobless claims remained below 300,000 for the seventh consecutive week. A reading consistently below 300,000 is said to indicate strength in the labor market.

The Labor Dept. also said that the four-week moving average rose to 287,250 from the previous week''s revised average of 282,000. The less volatile moving average has moved higher in two of out of the past three weeks after trending lower for the six weeks prior.