The slowdown reflected a decline in the rate of growth of both new orders and production, with the new orders index falling to 55.5 in December from 59.8 in November while the production index fell to 57.0 in December from 60.6 in November.

Growth in employment in the manufacturing sector also slowed in December, as reflected by a decrease by the employment index. The employment index fell to 52.7 in December from 56.6 in November.

The report also showed a significant slowdown in the pace of price growth, with the prices index falling to 63.0 in December from 74.0 in November. The ISM noted that the upward pricing spiral has been a source of continuing concern for manufacturers.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks advanced Tuesday, boosted by economic optimism and continuing momentum in last-year outperforming benchmarks. Taiwan’s Weighted index led the gainers, rising 1.4%, followed by Singapore’s Straits Times, up 0.6% on greater-than-expected GDP Q4 growth. South Korea’s Kospi reversed from early gains to close higher by 0.4% after reaching an all-time high. Japan, China and New Zealand were closed for the New Year holiday.

European stocks jumped sharply higher Tuesday to reach multi-year highs, lifted by oil and gas companies and upbeat German employment data. However, as U.S. markets failed to provide further upward momentum, averages slightly slipped. The German DAX 30 rose 0.3%, the French CAC 40 climbed 0.6%, and London’s FTSE 1000 rose 0.8%.The euro gained 1.1 % to $1.1940.

OIL, METALS, CURRENCIES

Crude oil prices rose above $63 a barrel on cold weather and speculative buying. Light sweet crude for February delivery surged $2.10 to $63.14 a barrel. Heating oil gained 2.7 cents to $1.7964 a gallon. Gasoline added 2.3 cents to $1.75 a gallon. Natural gas slipped 60 cents to $10.626 per 1,000 cubic feet.

European gold traded higher Tuesday on inflation concerns. In London gold rose to $528.40 per troy ounce, up from $513. In Zurich the precious metal advanced to $528.10 from $516.55. In Hong Kong gold rose $5.40 to close at $519.80. Silver closed at $9.03, up from $8.59. In New York gold closed up $13.60 to $532.50 per troy ounce.

The U.S. dollar fell against other major currencies. The euro was quoted at $1.1960, up from $1.1828. The dollar bought 116.72 yen, down from 117.78. The British pound traded at $1.7374, up from $1.7179.

EARNINGS NEWS

Watsco, Inc (WSO: chart), distributor of air conditioning, heating and refrigeration equipment, has declared regular quarterly cash dividends of 20 cents per share on both its Common Stock and Class B Common Stock. The cash dividends are payable on January 31, 2006 to shareholders of record as of January 13, 2006. Watsco’s goal is to build a national network of locations that provide the finest service and product availability for HVAC contractors, assisting and supporting them as they serve the country''s homeowners and businesses.

Walgreen Co (WAG: chart), drugstore chain, announced that Q1 of 2006 profit advanced to 34 cents per share, up from 32 cents per share in the same time last year on strong demand for prescriptions and the growth of higher-margin generic drug sales. The company missed the analysts’ expectations by a penny. Earnings in the most recent quarter were reduced by 2 cents a share for employee stock option expenses.

X-Rite, Inc. (XRIT: chart), provider of color measurement solutions, has declared a Q4 cash dividend of 2 1/2 cents per share on its common stock. The dividend is payable February 14, 2006, to shareholders of record at the close of business on January 17, 2006. X-Rite reported 21,235,899 shares outstanding on January 3, 2006.

COORPORATE NEWS

Dow component Johnson & Johnson was upgraded to overweight from neutral by J.P. Morgan, with the broker expecting 2006 guidance to be a positive catalyst for the stock.

J.P. Morgan also upgraded Baxter International Inc. to overweight from neutral. Separately, Baxter agreed to license Innovata''s Adept adhesion reduction biomaterial for an undisclosed sum.

Wyeth agreed to develop and market antibody-like drugs from privately-held Trubion Pharmaceuticals in a deal worth up to $800 million. Wyeth, which signed two biotech pacts in December, will pay $40 million upfront with milestones potentially reaching $800 million. Wyeth also agreed to take a stake in Trubion if the company goes public.

Affiliated Computer Services Inc. is reportedly close to selling itself to a consortium of private equity investors for $8 billion in a deal that may close by the end of the week.