[R]11:30AM U.S. market averages turned in a lackluster perfotrmance.[/R]

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.


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

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.


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

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.