U.S. MARKET AVERAGES

Retreating oil prices and fourth-quarter earnings reports sent averages above the flat line. Generally, investors reacted positively to the earnings reports, though several major companies announced lackluster results.

Strong quarterly results were released by United Technologies, Brinker International, Arbitron and Coach Inc as each company posted a quarterly growth above estimates. McDonald’s and Johnson & Johnson released net income rise in line with estimates. 3M reported profit rise, but failed to meet expectations, while DuPont posted profit decline above expectations. Lucent Technologies and Agere Systems were among the companies posting a fourth-quarter net income loss.

A number of key tech sectors came off their intraday highs in mid-morning trade. The semiconductor sector posted a modest gain, while the networking and software sectors pushed further into the negative territory. The networking sector stood out as the worst performer in the group, falling by about 1.2%.

Transportation stocks came off intraday highs. The airline sector remained higher by more than 2.1%. HMO, defense and retail stocks were other significant movers to the upside.

Burlington Northern Santa Fe (BNI: chart)jumped to a new 52-week high on earnings report. Engelhard (EC: chart) climbed to a new peak as BASF reaffirmed its plan to acquire the company, despite Engelhard's rejection of the $4.9 billion bid.

Tenet Healthcare (THC: chart) fell below a recent trading range to reach a new 52-week low. Tribune (TRB: chart) extended recent weakness to drop to a new low.

In midday trading, the Dow Jones industrial average rose 24.41, or 0.23%. The Standard & Poor's 500 index rose 3.32, or 0.26%, and the Nasdaq composite index rose 12.36, or 0.55%.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.38% from 4.36% late Monday.

MOVERS AND SHAKERS

Lexmark International (LXK: chart) said Q4 net income declined 47% to $82.3 million, or 71 cents a share, after sales dipped 11.6% to $1.37 billion, leading it to cut 825 positions and send 525 more to low-cost countries. The actions will cost $130 million pre-tax and will lead to annual savings of $80 million, including $50 million in 2006. Analysts were looking for Q4 earnings of 50 cents a share. Lexmark''s board approved an additional $1 billion stock buyback program. The stock rose 8.1%.

United Technologies (UTX: chart) reported Q4 earnings of $626 million, or 62 cents a share, up from a year-ago profit of $612 million, or 61 cents a share. Excluding charges the company would have posted earnings of $721 million, or 71 cents a share. Consolidated revenue rose 14% to $11.26 billion from $9.84 billion in the same period a year earlier. Analysts were expecting a profit of 70 cents a share on revenue of $11.1 billion. The company confirmed expectations for earnings of $3.40 to $3.55 a share in fiscal 2006 and said it plans to continue its current share repurchase rate, taking its total to about $1.5 billion for 2006. The stock gained 3.6%.

Ariba Inc. (ARBA: chart) reported Q1 net income loss of $3.7 million, or 6 cents a share, compared with a loss of $46.8 million, or 75 cents a share, a year ago. Excluding charges, the company would have reported a profit of $10.2 million, or 14 cents a share. Revenue fell 12% to $76.2 million from $86.9 million. Analysts expected earnings of 7 cents a share on revenue of $76 million. The stock jumped 24.3%.

ArvinMeritor (ARM: chart), car parts maker, reported Q1 earnings of $34 million, or 49 cents a share, up from a year-ago profit of $18 million, or 26 cents a share. On a continuing operations basis, excluding items, the company posted earnings of $11 million, or 16 cents a share with sales flat at $2.1 billion compared to last year. For 2006 the company sees earnings from continuing operations of $1.50 to $1.70 a share on sales from continuing operations of about $8.6 billion. For Q2 it forecast earnings before items of 35 to 40 cents a share on sales of $2.2 billion. The company’s shares rose 13.4%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks recovered from last-week sharp declines, following a securities probe of the Internet portal Livedoor which sent the Nikkei and the other regional bourses in the negative. Investors recharged with positive expectations and charged back into Asian equities. South Korea’s Kospi led the gainers, surging 2.3%, followed by the Nikkei, up 1.9% at 15,648.89. Taiwan’s Weighted index advanced 1.1%, while Shanghai Composite lost 0.3%.

European stocks closed mixed with the German and French indexes supported by strong gains in the auto and chemical sectors, and the U.K.’s index dragged down by Vodafone. The German DAX 30 gained 0.3%, the French CAC 40 advanced 0.3%, while London’s FTSE 100 slipped 0.1%.

OIL, METALS, CURRENCIES

Crude oil prices eased below $68 after Saudi Arabia offered to pump larger amount of crude oil to cover Nigeria’s outage. However, prices were supported by investor fears of potential shortages. Light sweet crude for March delivery fell 69 cents to $67.41 a barrel. London Brent declined 63 cents to $65.53.

European gold traded mixed. In London gold traded at $556.65, up from $555.70. In Zurich the precious metal traded at $556.65, down from $558.25. In Hong Kong gold rose 40 cents to close at $556.40. Silver opened at $8.99, up from $8.92.