US STOCKS-Merck weighs on Dow, market eyes earnings

                                

                                
 * Jobless claims in biggest rise in six months
                                
 * Marathon Oil rallies on plan to split off operations
                                
 * Merck tumbles on disappointing drug news
                                
 * Dow down 0.3 pct, S&P down 0.17, Nasdaq flat
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to afternoon, changes byline)
                                
 By Rodrigo Campos
                                
 NEW YORK, Jan 13 (Reuters) - The Dow industrials fell on
Thursday, hurt by a slide in Merck shares, but the market was
near 28-month highs as investors saw stocks' upward trend
continuing despite disappointing jobless claims data.
                                
 "There's an unwillingness to be too negative ahead of
earnings," said Michael James, senior trader at Wedbush Morgan
in Los Angeles.
                                
 He said traders are focused on Intel Corp <INTC.O> and
JPMorgan Chase & Co <JPM.N>, two Dow components reporting
results Thursday and Friday, respectively. Earnings from S&P
500 companies are expected to rise 32 percent in the fourth
quarter compared to a year ago.
                                
 Merck & CO <MRK.N> dropped nearly 7 percent to $34.64 after
it stopped giving a blood clot preventer, one of its most
important experimental drugs, to some patients. For details see
[ID:nN13276918].
                                
 The S&P healthcare index <.GSPA> fell 0.7 percent.
                                
 Weekly initial jobless claims jumped to their highest level
since October last week while food and energy costs lifted
producer prices in December, pointing to headwinds for an
economy that has shown fresh vigor. [ID:nN13271305].
                                
 However, a surge in exports to their highest level in two
years helped narrow the U.S. trade deficit in November, an
encouraging sign for positive surprises in the current earnings
season.
                                
 The Dow Jones industrial average <.DJI> dropped 33.68
points, or 0.29 percent, to 11,721.76. The Standard & Poor's
500 Index <.SPX> fell 2.24 points, or 0.17 percent, to
1,283.72. The Nasdaq Composite Index <.IXIC> dipped 1.05
points, or 0.04 percent, to 2,736.28.
                                
 The benchmark S&P 500 has gained 22.1 percent since the
start of September.
                                
 Intel, which makes chips used in many consumer electronics
devices, dipped 0.3 percent to $21.23 before its earnings
report due after the closing bell.
                                
 JPMorgan fell 0.6 percent to $44.45 ahead of its results,
expected before the market's open on Friday. Its shares have
risen 4.9 percent so far this year.
                                
 Marathon Oil Corp <MRO.N> gained 6.4 percent to $43.11
after it said it would spin off its refinery and pipeline
operations into a stand-alone company. [ID:nnN13266904].
                                
 Easing recent worries about the credit crisis in Europe,
Spain and Italy followed Portugal with successful debt sales on
Thursday. The euro rose 1.7 percent against the U.S. dollar,
its best day in six months. [ID:nLDE70C15C].
 (Reporting by Rodrigo Campos; additional reporting by Pedro
Nicolaci da Costa; Editing by Kenneth Barry)