[R]11:30AM Market averages traded mixed on rate worries. GM lost 3.4% on weak sales.[/R]

U.S. market averages traded mixed, as renewed concerns over rising bond yields offset the positive sentiment generated by new takeover activity and strength in the U.S. service sector. Hilton Hotels (HLT: chart) surged 26% and Huntsman (HUN: chart) jumped 12%. The ISM''''s index of service sector activity in June rose to 60.7%, indicating that non-manufacturing industries expanded faster than expected.

In world news, Bank Austria announced on Thursday that it signed an agreement to buy 95% of Ukrainian bank Ukrsotsbank from an investor group represented by Interpipe Group for about $2.2 billion. UniCredit Group’s subsidiaries HVB Ukraine and UniCredit Bank represent the bank in Ukraine, where Bank Austria will strengthen its presence even more through the acquisition deal. The transaction is expected to close by the end of 2007 and will be financed from Bank Austria''s cash resources.

By sector, oil service, broker/dealers and banks declined, while real estate investment trusts, telecoms and computer technology advanced. In late morning trading, the Dow fell 23.33, or 0.17%, to 13,553.97. Dow member General Motors (GM: chart) fell 3.4% after it was downgraded by a Bear Stearns after the automaker posted a 21.3% drop in June sales.

The Standard & Poor's 500 index was down 1.46, or 0.10%, at 1,523.41, and the Nasdaq composite index rose 1.55, or 0.06%, to 2,646.50. The tech-heavy Nasdaq was boosted in part by Apple (AAPL: chart), up 2.7%.


[R]The ISM’s non-manufacturing index gained 60.7%.[/R]

The Institute for Supply Management released its report on business activity in the service sector in the month of June on Thursday, showing that the pace of growth in the sector unexpectedly accelerated compared to the previous month. The report showed that the index of activity in the sector rose to 60.7 in June from 59.7 in May, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to slip to a reading of 58.0. The unexpected acceleration in the pace of growth came in spite of a modest slowdown in the pace of new orders growth, as the new orders index edged down to 56.9 in June from 57.4 in the previous month.

At the same time, the report showed a slightly faster rate of employment expansion, with the employment index rising to 55.0 in June from 54.9 in May. The report also showed a slowdown in the pace of price growth, as the prices index fell to 65.5 in June from 66.4 in May. Earlier this week, the ISM said that its index of activity in the manufacturing sector rose to 56.0 in June from 55.0 in May. The increase came as a surprise to economists, who had been expecting the index to come in unchanged at 55.0. With the increase, the index indicated the fastest pace of manufacturing sector growth since April of 2006, when the index came in at 56.9.


[R]9:45AM Market opened lower, as oil topped $72 a barrel and bond yields rose.[/R]

U.S. stock markets reopened lower on Thursday after the Independence Day holiday, hurt by surging crude oil prices and rising bond yields. Oil prices hovered near $72 a barrel ahead of weekly petroleum report. Investors also digested the interest rate hike by The Bank of England to 5.75%, which exerted pressure on the dollar. Stocks failed to sustain the positive pre-market mood, despite 27% rise in the shares of Hilton Hotels (HLT: chart) after Blackstone Group''s (BX: chart) $26 billion acquisition offer.

After market close on Tuesday, Blackstone said it will buy the hotel chain for $47.50 a share, which represents a 40% premium over Monday's closing price. The news suggested there will be more merger deals in the sector. Marriott International Inc. (MAR: chart) gained 6% and Starwood Hotels & Resorts Worldwide Inc. (HOT: chart) rose 8% amid speculations that they are possible takeover candidates.

In other deal news, chemicals group Huntsman (HUN: chart) advanced 12% after it received a $6 billion offer from a private-equity firm that trumps last week's bid from Dutch group Basell. Coca-Cola Co. (KO: chart) is reportedly looking into buying Cadbury Schweppes PLC's Snapple iced tea brand or building its own tea brand.

On the economic news front, two reports suggested a healthy labor market. The ADP employment report, a measure of jobs creation in the private sector, said 150,000 new non-government jobs were created in June, while the Labor Department said that initial claims rose by 2,000 in the latest week to 318,000.

In early trading, the Dow fell 45.20, or 0.33%, to 13,532.10. General Motors (GM: chart) pushed the blue average down, as its shares slipped 4.5%. The stock was downgraded by a Bear Stearns after the automaker posted a 21.3% drop in June sales compared to last year. The Standard & Poor's 500 index was off 1.28, or 0.08%, at 1,523.59, and the Nasdaq composite index fell 0.85, or 0.03%, to 2,644.10.


[R]8:00AM Huntsman Corp. received a $6.1 billion offer from Apollo Management.[/R]

Huntsman Corp. (HUN: chart), U.S. chemicals group, announced that it received an acquisition bid worth $6.1 billion from private-equity firm Apollo Management. The offer exceeds a previously agreed deal with Dutch group Basell. Apollo division Hexion Specialty Chemicals offered $27.25 a share in cash for Huntsman, representing an 8% premium to an offer of $25.25 a share, or $5.6 billion, from Basell.