1:00PM NY European markets closed lower, despite merger activity.
European stocks finished in the negative on Monday, reflecting growing concerns over the U.S. mortgage market which offset some merger and acquisition deals in the pharmaceutical sector. Akzo Nobel surged 15% after it agreed to sell its Organon BioSciences unit to Schering-Plough Corp. The deal also drove shares in the U.K.'s Imperial Chemical Industries up 5.4%. In other acquisitions news, U.K. pharmacy chain Alliance Boots jumped 7.1% after private-equity company Kohlberg Kravis Roberts and Boots' deputy chairman offered 1,000 pence a share for the group. Among some of the losers, Germany's E.On fell 0.7% and Pernod-Ricard dropped 1.3% in France. shares in aerospace and defense group EADS lost 1.1% following downgrades at Societe Generale and UBS. The French CAC 40 dropped 0.8% at 5,496.07, the U.K.'s FTSE 100 index dipped 0.2% at 6,233.30 and the German DAX 30 index finished unchanged at 6,715.49.


11:30AM Stock averages traded in a lackluster fashion.
U.S. stocks traded in a lackluster fashion. On the one hand, significant merger-and-acquisition news generated some buying interest, but on the other, disappointing news from New Century Financial added to recent concerns about a crisis in the subprime mortgage business. Investors were also awaiting key inflation data later this week, including reports on wholesale and consumer inflation in February. The choppy trading was also a result of a continued decline by the price of oil which contributed to some weakness among energy stocks. In M&A news, discount retailer Dollar General (DG) surged 27% after it agreed to be bought by affiliates of private equity firm Kohlberg Kravis Roberts & Co. for $7.3 B.

By sector, financial stocks stood out among losers on a stream of bad news for the subprime market. Shares in New Century Financial (NEW) dropped 17%, followed by Countrywide Financial (CFC), down 3%. Companies like Impac Mortgage Holdings (IMH) and IndyMac Bancorp (NDE) were also affected, falling by 7.3% and 5.6% respectively. Homebuilding stocks were also among the worst performers, led by Hovnanian Enterprises (HOV), down 4.5%, Lennar (LEN), down 4.1%, Toll Brothers (TOL), down 4%, and KB Home (KBH), falling 3.3%. Wall Street companies which have been actively buying mortgages and selling them as mortgage-backed securities posted notable weakness. Lehman Brothers (LEH) fell nearly 1%, Bear Stearns (BSC) dropped 1.5%, and Morgan Stanley (MS) slipped 1.2%.

Elsewhere, Dow component Boeing Co. (BA) rose 1% after Continental Airlines increased a previous order for Boeing 787 jets to 25 from 20. Another blue-chip company, Ford Motor (F) lost 0.3% ahead of a press conference in which it is expected to announce it''s selling the Aston Martin sports car unit. In late morning trading, the Dow Jones industrial average fell 7.37, or 0.06%, to 12,268.95. The Standard & Poor''s 500 index fell 2.64, or 0.19%, to 1,400.21, and the Nasdaq composite index rose 1.62, or 0.07%, to 2,389.17.


9:45AM U.S. stock markets opened mixed. Subprime mortgage worries weighed.
U.S. stock markets opened mixed on Monday, reflecting growing concerns of a possible crisis in the subprime mortgage market. A warning from New Century Financial about its financial woes offset the positive sentiment, generated by some significant merger news. The troubled mortgage lender was downgraded by UBS after it said its lenders are cutting off credit. New Century’s (NEW) stock plunged 56% in pre-market trade, while in early trading it was down only 17%. One of the nation''s largest mortgage lenders, Countrywide Financial (CFC) dropped 2% after it said that the volume of subprime loans it made in February declined because of tightened lending standards. Investors worry that problems from subprime may spread to other parts of the U.S. loan market, affecting companies such as IndyMac Bancorp. (NDE), down 3.4%, Impac Mortgage Holdings (IMH) down 4.7%, and even General Motors (GM), falling 0.7%.

The downside trend for the market was limited by significant strength in the healthcare sector on the back of merger-and-acquisition news. Schering-Plough Corp. (SGP) edged up after it agreed to buy Organon BioSciences for $14.4 billion in cash from Holland''s Akzo Nobel (AKZOY). Akzo Nobel shares jumped 15%. Sierra Health Services (SIE) surged 16%, helping to lead the sector higher after the company agreed to be acquired by UnitedHealth (UNH) for $2.6 billion. Outside the sector, discount retailer Dollar General Corp. (DG) surged 27% after it agreed to be acquired by affiliates of private equity firm Kohlberg Kravis Roberts & Co. in a deal valued $7.3 billion. In the opening minutes of trading, the Dow Jones industrial average fell 5.28, or 0.04%, to 12,271.04. The Standard & Poor''s 500 index fell 1.19, or 0.08%, to 1,401.66, and the Nasdaq composite index 0.95, or 0.04%, to 2,386.60.


9:30AM London trades lower as miners offset merger-and-activity gains.
The UK market was lower on Monday. The FTSE 100 was trading at 6,228, or 0.28% down.

Advancers

Alliance Boots surged 7.4% in response to the unprecedented 10 pounds per share offer on Friday. The board of the chemist chain is meeting today to discuss the offer. ICI is another advancer on the back of speculation that Akzo Nobel may be mulling an offer.

Hiscox was up 2.9% after stronger figures. Underwriter Hiscox posted a record 201.1 million pounds profit as claims eased as premiums soared. Lookers is up, 4.8%, after the car dealer reported a 32% increase in year profit last year to 21.4 million pounds compared with 16.4 million pounds in 2005. The firm reported strong growth across all areas of the business with turnover up 16%.

Decliners

J Sainsbury fell 2.3% though as KKR, which is backing Stefano Pessina offer for Alliance Boots, may now have too much to pursue its interest in the supermarket chain. Marks & Spencer is down 1.2% in sympathy.

Meanwhile, miners such as Rio Tinto, down 0.2% and BHP Billiton, trading flat, are off their best levels or in the red. Among the mid-caps, although housebuilder Bovis posted a 14% gain in underlying profits last year to 132 million pounds, it fell 2.9%. The firm added that housing market fundamentals remained robust.


9:00AM Schering-Plough agreed to buy Alzo Nobel for $14.4 billion.
Schering-Plough (SGP) announced on Monday that it agreed to buy pharmaceutical division of Dutch Akzo Nobel (AKZOY) in a cash deal worth $14.4 billion (11 billion euros). The acquisition of Organon Bio Sciences is expected to boost its line-up of central nervous system and women''''s health-care products, adding five products in Phase III trials and other projects in Phase II development. Organon''''s research and manufacturing unit in Oss, the Netherlands, will become Schering-Plough''''s global gynecology and fertility activities center. In 2006 Organon''''s pharmaceutical business had sales of $3.4 billion, led by Folistim/Puregon, Esmeron/Zemuron and NuvaRing and Implanon.

Schering-Plough also expects the deal to contribute to higher earnings in its first full year, excluding purchase-accounting adjustments and acquisition-related costs. It estimates $500 million a year in synergies in the third full year. As soon as the sale closes, Akzo Nobel plans to buy back up to 1.3 billion euros of its shares. Akzo''''s shares soared 19% to 55.01 euros ($72.28) in Amsterdam trading.