11:30AM U.S. market averages turned in a lackluster perfotrmance.

The U.S. market averages turned in a lackluster performance in late morning trading after posting a notable weakness at opening. The Dow traded lower, dragged by Citigroup (C: chart), Merck (MRK: chart), Coca-Cola (KO: chart), and Procter & Gamble (PG: chart), each falling about 1%. However, Wal-Mart (WMT: chart) and General Electric (GE: chart) limited the downward trend, rising 3% and 1.3%, respectively.

Airline stocks fell after Continental Airlines (CAL: chart) reported lower revenues per passenger in May. Continental shares dropped 3.6%. UAL Corp. (UAUA: chart) was the most notable decliner on the Nasdaq, falling 5.7%. The networking sector posted gains, with Avaya (AV: chart) rising 4% amid reports that it is close to a deal to be acquired by two private equity firms for more than $8 billion. Some computer hardware stocks also showed strong upwards moves. Palm (PALM: chart) jumped 8% after agreeing to sell 25% of the firm to a private-equity firm for $325 million

In other merger-and-acquisition news, Axa (AXA: chart) agreed to sell a Dutch unit for $2.35 billion to SNS Reaal of Holland. Accredited Home Lenders Holding (LEND: chart) surged 11% after the subprime mortgage firm agreed to be acquired by Lone Star Fund V L.P. for $15.10 a share in an all-cash deal.

Investors paid little attention to news that factory orders rose 0.3% in April, below the 0.8% expected by economists. The Dow Jones industrial average was down 26.33 points, or 0.19%, at 13,641.78. The Standard & Poor's 500 Index was down 1.40 points, or 0.09%, at 1,534.94. The Nasdaq Composite Index was down 5.54 points, or 0.21%, at 2,608.38. The benchmark 10-year note was yielding 4.94% on Monday, a slight dip from 4.96% on Friday.


9:45AM U.S. stocks opened in the negative, pressured by Shanghai weakness.

Wall Street opened in the negative, pressured by an overnight plunge in the Chinese stock market. Merger activity continued on Monday, helping to limit the downward trend. Dominion (D: chart) added 1% after it agreed to sell most of its U.S. gas and oil operations to Loews (LTR: chart) and XTO Energy (XTO: chart) for a total of $6.5 Billion.

Further in deal news, Avaya (AV: chart) rose over 3% amid reports that it is close to a deal to be bought by TPG Capital and Silver Lake Partners for $17 a share. Digene (DIGE: chart) surged 33% after Qiagen agreed to acquire the company for $1.6 billion in cash and stock. Flextronics International (FLEX: chart) fell 1.6% after it said it agreed to buy electronics maker Solectron in a cash-and-stock deal worth about $3.6 billion.

Acquisition news sent Accredited Home Lenders Holding (LEND: chart) 11% higher. The subprime mortgage firm agreed to be acquired by Lone Star Fund V L.P. for $15.10 a share in an all-cash deal. Among the very few companies reporting quarterly results, Krispy Kreme Doughnuts (KKD: chart) said its Q1 loss widened on falling revenue. The results came in below analyst estimate, and Krispy Kreme stock dropped 4.3%.

In the first hour of trading, the Dow Jones industrial average fell 29.34, or 0.21%, to 13,638.77. The Standard & Poor''s 500 index declined 2.35, or 0.15%, to 1,533.99, and the Nasdaq composite index lost 4.07, or 0.16%, to 2,609.85. Bonds edged higher, with the yield on the benchmark 10-year Treasury note falling to 4.95% from 4.96% late Friday.


9:30AM The FTSE 100 is lower in mid-afternoon trade on weak media sector.

The FTSE 100 is 0.4% lower in mid-afternoon, trading at 6,651.2, a drop of 25 points.

Advancers

Royal Bank of Scotland advanced 1% on news that it is set to sell its Southern Water unit for around 4 billion pounds. Reuters Group bucked the downtrend in the media sector and was up 0.9%, after the financial information company was taken over by Thomson Corp of Canada three weeks ago.

Decliners

After Rupert Murdoch approach for the Wall Street Journal, anticipation of a fierce competition weighed on the business publishing stock, sending them lower. Pearson lost 1% and Reed Elsevier, which owns business information services both in Europe and the U.S. dipped 1.3%.

GlaxoSmithKline declined 1.1% as there are still concerns over possible health risks in its Avandia diabetes drug. Whitbread, another decliner, was 0.4% lower despite unveiling the sale of its David Lloyd health club chain to the London & Regional property company.

Segro, known before as Slough Estates, erased early morning gains and was trading down 0.1% after it confirmed the 1.5 billion pounds disposal of its US property concerns. It promised to return 250 million pounds of the proceeds to investors through a special dividend.