(Updates to midday, changes byline)
By Jennifer Coogan
NEW YORK, Feb 11 (Reuters) - U.S. stocks were little
changed on Monday as financial sector shares were hurt by
worries about the impact of the credit crisis on insurer
American International Group Inc <AIG.N>, offsetting bargain
hunting and takeover talk in the technology sector.
Shares of AIG, the world's largest insurer, plunged more
than 11 percent after AIG received a rebuke from its auditors
for how it valued some credit derivatives. It was the worst
one-day percentage drop for AIG shares since the 1987 stock
market crash.
That dragged on financial sector stocks, with the S&P
financials index <.GSPF> down 1.7 percent.
The disclosure cast doubt on AIG's past contention that it
didn't face major problems stemming from the credit crisis that
has slammed other financial institutions.
AIG's "a reminder that the financial situation doesn't just
turn around. There can still be more issues ahead that will
continue to weigh on investor's minds," said Richard Sichel,
chief investment officer of Philadelphia Trust Co. "But stocks
are not overpriced."
The Dow Jones industrial average <> was down 13.98
points, or 0.11 percent, at 12,168.15. The Standard & Poor's
500 Index <.SPX> was up 1.40 points, or 0.11 percent, at
1,332.69. The Nasdaq Composite Index <> was up 5.37
points, or 0.23 percent, at 2,310.22.
The Nasdaq's gains were led by Apple Inc <AAPL.O> shares
after Citigroup added the iPod maker to its top picks list.
Shares of Apple, like those of BlackBerry maker Research in
Motion <RIMM.O>, are down more than a third from their 2007
highs, making them attractive to bargain-hungry investors.
Apple was up 2.1 percent to $128.34. Research in Motion was
up 3.2 percent to $92.65.
AIG's decline came after the company disclosed
PricewaterhouseCoopers, the company's outside auditors, said
AIG failed to account properly for derivatives related to risky
debt.
AIG shares were down 11.5 percent to $44.84, the lowest
level in five years, making them the worst drag on the Dow.
Honeywell International Inc <HON.N> was the next-biggest
blue chip laggard. The diversified manufacturer is being
removed, along with tobacco maker Altria Group <MO.N>, from the
Dow Jones Industrial Average in the first change to the index's
components in four years. Chevron Corp <CVX.N> and Bank of
America Corp <BAC.N> will be added to the Dow.
Honeywell shares were down 1.1 percent to $57.21. Altria
shares fell 0.6 percent to $72.62.
Yahoo Inc <YHOO.O> rejected Microsoft Corp's <MSFT.O>
takeover bid as too low, raising the possibility of a higher
offer. In addition, Motorola Inc <MOT.N> and Nortel Networks
Corp <NT.TO> may combine their wireless networking units,
according to The Wall Street Journal. For details, see
[].
Yahoo shares rose 1.2 percent to $29.54, while Microsoft
shares fell 1.8 percent to $28.05. Motorola's shares rose 2.1
percent to $11.50.
On Friday, the Dow Jones industrial average ended its worst
week in nearly five years.
(Editing by Leslie Adler)
