U.S. MARKET AVERAGES

A downbeat report on Google which caused a 1% drop in tech stocks together with nervousness about the course of interest rates ahead of a speech from new Fed Reserve Chairman Ben Bernanke kept stocks in the negative.

Technology stocks fell after Barron''s warned in a negative article on Google(GOOG: chart) that the company’s shares could be cut in half over the next year on competition from Microsoft and Yahoo and pricing pressures for online ad sales.

Rate-sensitive stocks, including Caterpillar Inc. and Citigroup Inc slid 1% each.

Merrill Lynch & Co drew positive reactions, reporting to be in advanced talks to acquire a large stake in fund manager BlackRock for $8 billion.

Alcoa (AA: chart) was the most notable decliner on the day, falling by about 2.7%, reaching its lowest level since late January. Disney (DIS: chart), Caterpillar (CAT: chart) and IBM (IBM: chart) posted losses of more than 1.2%.

Home Depot (HD: chart) was the best performing Dow component on the day, rising on speculation about a Chinese acquisition. The stock came well off its high, showing a 1% gain.

The Dow Jones industrial average was down 41.46 points, or 0.38%. The Standard & Poor''s 500 Index was down 5.90 points, or 0.47%. The Nasdaq Composite Index was down 23.86 points, or 1.05%.

MOVERS AND SHAKERS

Agilent Technologies (A: chart), maker of electronic measurement solutions, announced Q1 profit more than doubled from last year. The company reported net income of $154 million, or 32 cents per share, up from $71 million, or 15 cents per share a year ago, exceeding estimates of 30 cents per share. Including a $2.7 billion gain from the sale of certain businesses, the company''s Q1 profit was $2.82 billion, or $5.83 per share. For Q2 the company predicted a profit range of 35-40 cents a share per share compared with analyst estimates of 36 cents per share. The stock fell 3.7%.

Genentech (DNA: chart) and majority owner Roche Holdings announced they stopped recruiting for a Phase III trial of Avastin to treat post-surgical adjuvant colon cancer. Outside of colon cancer, there were more deaths among those taking the Avastin therapy with Xelox than those taking Folfox or Folfox with Avastin, the companies said. The company’s shares fell 1.5%.

BlackRock (BLK: chart) surged 12% on report that Merrill Lynch & Co is in advanced talks to acquire a large stake in the fund manager for $8 billion.

The Home Depot Inc. (HD: chart) is in talks to buy a 49% stake in China''s Orient Home, one of the mainland''s leading do-it-yourself chains, for more than $200 million. The stock gained 1.6%.

Celestica Inc (CLS: chart), electronics manufacturing services company, was upgraded to buy from neutral at Merrill Lynch, citing valuation and expectations of improved operational performance. The stock rose 5.6%.

INTERNATIONAL MARKETS NEWS

Asian-Pacific benchmarks finished largely in the negative with Tokyo leading the decliners. The Nikkei tumbled 2.3%, or 380.17 points on strong export data which renewed speculations that the Bank of Japan would tighten its monetary policy. South Korea’s Kospi and Sydney All Ordinaries fell 1.1% each, while the Bombay Stock Exchange Sensitive index gained 0.4% and Singapore Straits Times gained 0.3%.

European stocks closed in the positive Monday, boosted by strong auto sector gaining on the back of steady oil and weaker euro. Auto stocks like Volkswagen. BMW, DaimlerChrysler and Renault rose above 2%. The German DAX 30 rose 0.4%, the French CAC 40 gained 0.3%, and London’s FTSE 100 added 0.3%.

OIL, METALS, CURRENCIES

Crude oil prices declined extending recent losses amid ample petroleum stocks. Light sweet crude for March delivery dropped 24 cents to $61.60 a barrel. Gasoline lost nearly 2 cents to $1.615 a gallon, while heating oil gained 9 cents to $1.6525. London Brent fell 27 cents to $59.37.

European gold traded lower Monday. In London gold fell to $546.60 bid per troy ounce from $547.60. In Zurich the precious metal traded at $546.20, down from $550.40. In Hong Kong gold dropped $14.20 to close at $545.30. Silver opened at 9.26, down from $9.30.