U.S. MARKET AVERAGES

Stock markets started the new session mostly higher as investors welcomed news of a $7.5 billion acquisition in the insurance sector and an investment rating upgrade at International Business Machines Corp., but later the averages lost their early gains and since then have been trading below the flat line. The weakness came after auto-parts supplier Delphi Corp. filed for bankruptcy over the weekend, providing additional stress to the automotive industry.

Investors’ attention is also focused on the start of third-quarter earnings reports and end-of-the-year profit outlooks.

Dow component Alcoa, the world’s largest aluminum producer, will kick off the reporting season when it announces quarterly results after the closing bell.

The gold sector is advancing in the early going, rising by 1.1% after a choppy trading session the previous week when the sector was sharply down in the first three days and then reversed losses in the last two. HMO stocks are higher as well. The disk drive, Internet and software spaces post modest gains.

The semiconductor sector is among the morning's worst performers, down by 1.7%, dragged largely by Xilinx (XLNX: chart). The stock’s drop is more than 13% on lowered quarterly sales guidance released before the opening bell.

MOVERS AND SHAKERS

Auto parts maker Delphi (DPH: chart) dropped 48% after the company was pressed to file under Chapter 11 of federal bankruptcy law on Saturday after failing to negotiate a restructuring plan with previous parent company General Motors (GM: chart) and the United Auto Workers union. The filing was the largest in the US auto industry and was linked to high wage and benefit expenses. General Motors fell 4.2%.

Auto system company Dana Corp. (DCN: chart) lost 24.4% after it said yesterday it will have to review earnings for 2004 and part of 2005 and postpone its third-quarter report, because of accounting controls issues. Dana has not set a new date for its third-quarter earnings release, which had been slated for October 19. The company has also withdrawn earnings forecasts for the fiscal year 2005.

Dow component International Business Machines Corp. (IBM: chart) added 1.6% after the company was upgraded at Citigroup to “buy” from “hold”. The broker cited as a reason the company’s strenght in computerr services, and gains in market share for mid-range and high-end servers market.

Another Dow component, Intel Corp. (INTC: chart), was up 0.4%, after a report in Wall Street Journal announcing that the company will introduce a series of dual-core server chips, as a part of its competition with rival Advanced Micro Devices (AMD: chart). The new chips promise up to a 50% improvement over systems with two single-core processors. Advanced Micro also rose 0.4%.

Jefferson-Pilot Corp. (JP: chart) jumped 7.3% after the news it will be bought by insurance provider Lincoln National Corp. (LNC: chart) for about $7.5 billion in cash and stock. This would be one of the biggest acquisitions in the financial sector recently. Lincoln National was up 1.5%.

ECONOMIC NEWS

No major economic news release is expected on Monday.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed with the Japanese Nikkei closed for a national holiday. Across the region Hong Kong’s Hang Seng added 0.3% with China Resources Enterprise and oil company CNOOC among the biggest gainers. South Korea’s Kospi rebounded from last week’s decline of 3% to climb 2% on third-quarter earnings forecasts and positive consumer sentiment index data. The Tokyo foreign exchange market was closed Monday.

European markets traded higher at mid-day, boosted by telecom equipment stocks on news that Ericsson is near a deal with its smaller rival Marconi and on optimism from Nokia. The stock markets were also supported by higher finish on Wall Street Friday, steady oil prices, and German political news. The German DAX 30 added 0.9%, the French CAC 40 rose 0.7%, and London’s FTSE 100 increased 0.6%.

ENERGY, METALS, CURRENCIES

Oil prices climbed near $62 a barrel on approaching winter season in the Northern Hemisphere. Light sweet crude for November delivery rose 3 cents to trade at $61.87 a barrel on the Nymex. Heating oil inched up to $1.9670 a gallon. Gasoline rose a penny to $1.8360 a gallon. London Brent gained 12 cents to $59.33.

Gold prices advanced in European trading. In London the precious metal traded at the recommended price of $477.50 per troy ounce, up from $475. In Hong Kong gold rose $6 to close at $478.55. Silver opened at $7.76 up from $7.67.