straitstimes.asia1.com.sg By JEFFREY GARTEN

PARIS - The Bush administration is leaving no doubt that it intends to use the United States' enormous military power to make the world a safer place. But to succeed, Washington must develop a more robust global economic policy as well. Unless its military confrontations lead to something much better for the millions of people who will be hurt, Americans will have won the wars and lost the peace.

It is true that the administration is promoting trade liberalisation aggressively by pushing for new commercial deals with Latin America, as it has done with Chile recently and is now doing in Central America. It is also pressing for more tariff and quota reductions around the world in an omnibus negotiation that it hopes to conclude within two years under the auspices of the World Trade Organisation (WTO).

These efforts are an excellent start. But there are at least four broader challenges the US must confront now, and with an urgency that the Bush administration has yet to demonstrate.

The first is reinvigorating global economic growth. The world economy is in trouble: corporate investment and trade are slowing, factories are producing more than they can sell and deflation is threatening many regions. The two potential economic engines besides the US - Germany and Japan - are stagnating. Big emerging markets, from Indonesia to Brazil, are in deep trouble.

The US economy is the world's most powerful by far, accounting for almost a third of global demand these days, but even if it grows at a healthy rate this year, the US by itself cannot create a sustainable international economic recovery. Its own revival depends on the health of its companies and that, in turn, depends in part on expanding foreign markets.

Overseas sales of US goods and services made up at least 25 per cent of America's economic growth in the 1990s. Moreover, because many of America's top companies - Intel, Coca-Cola and Johnson & Johnson, for example - rely on Europe, Japan and developing countries for more than 30 per cent of their revenues, stronger foreign economies are important to the health of US stock markets.

Washington must bring together its economic partners - the Group of Seven nations made up of Canada and Japan and those in the European Union (EU) - to get the global economy moving again.

The US, which is already running huge budget deficits and has lowered interest rates to levels not seen in generations, has little room to manoeuvre. But it can encourage the European Central Bank, Europe's equivalent of the Federal Reserve, to lower its relatively high interest rates, since inflation on the continent is not nearly the threat that stagflation is.

The EU must also let up on its growth-constricting demands that Germany, Italy and France restrict spending and, in some instances, raise taxes. The US and Europe can push Japan to restructure its growth-strangling bank debts.

Second, there will soon be an acute need to rebuild countries that are either defeated or disintegrating. The estimates for reconstructing Iraq, for example, range from US$120 billion (S$209 billion) over 10 years, in the case of a very short war, to US$1.2 trillion after a prolonged conflict, according to extensive work by economist William Nordhaus.

The job of economic relief and reconstruction will most likely need to be handled by the United Nations, but substantial US financial support will be essential. Given budget deficits at home, this will be no easy task. Will this money come from domestic programmes or from foreign aid already promised to others?

One problem is that there is no single agency in Washington capable of overseeing the extensive UN efforts that must be mounted. One needs to be created, just as the Economic Cooperation Administration was established in 1948 to oversee the Marshall Plan.

Third, America needs to prepare for all-too-possible international economic crises. A major run-up in oil prices in reaction to turmoil in Venezuela and Iraq has already begun and could send the global economy into a deep recession. The US should be working with the EU and Japan to release emergency oil reserves if oil prices spiral out of control. It should be encouraging Russia to expand production, too, by promising that the US will buy Moscow's supplies well into the future.

Another crisis could involve the dollar, which was down 15 per cent against the euro last year. If the US trade deficit continues to soar and foreigners get nervous, they could dump their dollars.

It would help if Washington could persuade the European Central Bank to lower its interest rates and make the euro less attractive as an alternative to the dollar. Beyond that, Washington, Brussels and Tokyo will have to be prepared to coordinate purchases of the dollar if it goes into free fall.

Latin America could also provide the spark for a global financial debacle. After all, Argentina and Venezuela are in deep trouble, and Brazil's economy is fragile at best. In 1997, a currency collapse in Thailand set off a global financial meltdown. The lesson is that Washington and its economic partners had better focus more on what is happening south of the Rio Grande.

Finally, the US will have to give much more attention to helping developing countries, the very nations in which so much of today's turmoil exists, get a fairer deal from globalisation, which has so far disproportionally benefited rich countries.

This means not only negotiating trade agreements but also improving the WTO's ability to settle trade disputes and give technical assistance to struggling countries overwhelmed by the blizzard of new trade laws in the last decade. It also means helping the World Bank and its regional counterparts to deal with poverty more effectively, rather than just criticising their performance, which is what Washington so often does.

Admittedly, the Bush administration has never shown much interest in multilateral diplomacy except when other countries press it to the wall, as they have with Iraq. But in the economic realm, there is no choice but to seek partners.

In the immediate aftermath of World War II, the US pushed for the establishment of the International Monetary Fund and World Bank, and coordinated the Marshall Plan with European nations. Washington realised then that economic stability and prosperity were essential to a country's security.

It is true today, too.

• The writer is dean of the Yale School of Management and author of The Politics Of Fortune: A New Agenda For Business Leaders. He held economic and foreign policy positions in the Nixon, Ford, Carter and Clinton administrations. This comment appeared in the New York Times.

cbs.marketwatch.com By Craig Tolliver, CBS.MarketWatch.com Last Update: 3:11 PM ET Jan. 13, 2003

CHICAGO (CBS.MW) -- The founder of the Templeton Funds once said, "Outperforming the majority of investors requires doing what they are not doing." His solution: buying when pessimism is at its maximum.

Putting John Templeton's dictum to the test, Morningstar is out with its annual survey of "unloved funds" that saw last year's biggest loss of assets under management. The Chicago-based fund tracker first introduced the study in 1996, after tracing fund flows back to 1987.

Morningstar discovered that the funds from the most unpopular asset classes each year outperform the average equity fund over the following three years more than 75 percent of the time.

Moreover, unpopular funds have outpaced popular ones more than 90 percent of the time.

"Buying one fund from each of these categories and sticking with them for a few years has been a profitable investment for those who have the patience and willpower to handle contrarian investing," said Christine Benz, editor of Morningstar FundInvestor.

This year's least popular fund categories include:

• Latin America: For the second straight year, Latin America funds got no love from investors, thanks to concerns over Brazil's political and economic volatility and continued instability in Argentina and Venezuela, Morningstar noted.
• Utilities: Enron and the California energy debacle; WorldCom and the general blowup of the telecom sector topped the agenda.
• Financials: Money-center banks, asset managers and brokerages were stung from the three-year bear market. Seemingly unnoticed, however, were funds focusing on regional banks, which had a stellar year -- such as Senbanc (SENBX: news, chart, profile), up nearly 19 percent in 2002. See table below.

"We understand that some investors may be skeptical about funds in these categories, but we believe they're likely to turn around in the upcoming years," Benz said.

"While the categories that are garnering the most new inflows these days -- precious metals, small-value, and real estate funds -- may seem more appealing, our research indicates funds from unloved categories for a given year actually outperform popular fund categories during the three following years," Benz added.

For those that find the Unloved Funds theory intriguing, Morningstar offers the following advice:

Buy one fund from each of the three unpopular groups

Not every downtrodden category will rally during the next three years, so diversifying with a small stake in each group can be key. For example, Latin America funds, which Morningstar named as one of its unloved categories in early 2000, have continued to lag, while precious-metals funds have been strong. Exposure to all three categories increases the chances for market-beating returns.

Hold for three years

Don't expect instant results. Gold fund investors in early 2000 might have been tempted to dump them after losing an average 17 percent that year. But, metals funds went on to garner large gains in 2001 and 2002.

Limit the investment

Since unpopular categories frequently dabble in highly volatile markets, limit exposure to these funds to no more than 5 percent of your portfolio. And while the strategy has been highly successful, it's not foolproof.

In 1995, for example, Morningstar suggested investors buy funds in the communications, precious metals, and European-stock categories. Because of a terrible showing from the precious-metals funds, the unpopular group posted a three-year annualized return of only 10 percent -- half the gain of the popular funds.

If possible, buy soon

Morningstar studies have shown that, generally, investors can buy the funds up to a year later and the strategy still works. However, all three unpopular categories for 2002 are vulnerable to market-timers, so in this case, the analyst suggests buying while stock prices are low -- before timers can swoop in and push prices up in a hurry.

Top performing Unloved Funds

The funds below were the best performing funds of their respective "unloved" asset classes and are provided for reference and not as a recommendation from Morningstar.

Latin America Name Ticker 2002 Return 3-Yr Return Templeton Latin Amer (TELAX: news, chart, profile) -16.98 -9.56 T. Rowe Price Latin Amer (PRLAX: news, chart, profile) -18.10 -10.14 Scudder Latin Amer (SLAFX: news, chart, profile) -18.28 -11.90 Latin America Category -20.18 -13.77

Source: Morningstar, data annualized through December 2002

Utilities Name Ticker 2002 Return 3-Yr Return Franklin Utilities (FKUTX: news, chart, profile) -10.48 5.23 Eaton Vance Utilities (EVTMX: news, chart, profile) -12.50 -8.93 Principal Utilities (PUTLX: news, chart, profile) -12.73 -9.51 Utilities Category -23.81 -12.86

Source: Morningstar, data annualized through December 2002

Financial Services Name Ticker 2002 Return 3-Yr Return Senbanc (SENBX: news, chart, profile) 19.79 18.96 FBR Small Cap Financial (FBRSX: news, chart, profile) 18.68 24.86 Burnham Financial Svcs (BURKX: news, chart, profile) 17.55 32.42 Financials Category -10.58 4.25

Source: Morningstar, data annualized through December 2002 Craig Tolliver is the mutual funds editor for CBS.MarketWatch.com in Los Angeles.

washingtontimes.com

     NEW YORK, Jan. 13 (UPI) -- Stock prices on the New York Stock Exchange and the Nasdaq Stock Market were mixed, ending near the flat line in trading Monday, pressured by weakness in the oil patch.

     The blue-chip Dow Jones industrial average, which rose 8.71 points Friday, rose 1.09 points to close at 8,785.98. The tech-heavy Nasdaq composite index, which gained 9.26 points in the previous session, ended down 1.64 points to close at 1,446.08.

     The broader New York Stock Exchange composite index fell 0.59 to close at 5,206.10 while the Standard & Poor's 500 index lost 1.30 points to close at 926.27.

     The American Stock Exchange composite index dropped 6.90 points to close at 826.54 while the Wilshire 5000 Index dropped 12.78 points to close at 8,745.65.

     Volume was 1.65 billion on the Big Board and 1.53 billion on the Nasdaq Stock Market.

     Analysts said stocks reversed gears around midday amid a decline in oil stocks, a slew of fresh corporate news and broker downgrades.

     Oil prices came under pressure after the Organization of Petroleum Exporting Countries agreed Sunday to increase crude production by 1.5 million barrels a day, or 6.5 percent, to 24.5 million in a bid to lower prices and offset shortages resulting from a strike in Venezuela. Oil service stocks were the biggest losers.

     On the corporate front, Duke Energy, the nation's second-largest utility owner, said its 2002 earnings fell more than expected because of a damaging ice storm, job cuts and a decline in power prices and trading. Profit, excluding some expenses, was about 10 cents less than its previous estimate of about $1.95 a share.

     Meanwhile, brokers at J.P. Morgan Securities Inc. said personal-computer sales may be weak as customers fail to upgrade their systems, and prices may be further reduced. The firm lowered Dell Computer, the world's largest PC maker, to neutral from overweight.

     Brokers at Thomas Weisel cut their rating on Johnson & Johnson's stock from buy to attractive, citing concerns about the healthcare-pharmaceutical giant's business.

     Brokers at CSFB downgraded Motorola to underweight from neutral and cut its price target to $8 a share from $11, saying the fundamental risks outweigh the potential rewards at the current valuation.

     The firm also said it thinks entertainment and media stocks are likely to outperform the broader market in 2003, with advertising in an upturn mode.

     And, AOL Time Warner came off its best level as investors digested news that Chairman Steve Case resigned Sunday in a move he said was "in the best interest" of the troubled media giant. Case will remain as a director of the company with responsibility for corporate strategy.

     With Case stepping down, it's possible that the company will take quick, decisive action to solve the 2-year-old problem with its troubled America Online division, experts said.

     Intel Corp. slipped ahead of Tuesday's release of its earnings. The chip giant is expected to report earnings of 14 cents a share.      In other corporate news, Georgia-Pacific Corp. warned that its fourth-quarter profit would come in well below Wall Street's consensus forecast.

     Wall Street's forecasters are bullish about the outlook for corporate earnings in the fourth quarter, but their views get less rosy the farther they gaze into their crystal balls.

     The earnings flood hits tidal wave proportions on Thursday, with reports expected from BankOne, Delta, EBay, General Motors, FleetBoston, Sears Roebuck, Sun Microsystems, United Technologies and Wachovia, among others.

     Meanwhile, a full plate of economic data awaits investors starting with retail sales and import/export prices on Tuesday.

     The Fed's Beige Book comes out on Wednesday, along with the producer price index and business inventories.

     Jobless claims and the consumer price index come on Thursday. The week wraps up with international trade, industrial production and, importantly, consumer sentiment.

     Meanwhile, U.S. Treasury prices rose. The 10-year bond added 2/32 to 99. Its yield, which moves in the opposite direction of its price, fell to 4.12 percent from 4.13 percent late Friday.

     In Europe, stock prices ended lower in London, but rose in Frankfurt and Paris in moderate trading. The London International Stock Exchange's blue-chip FTSE-100 index lost 37.0 points, or 0.9 percent, to 3,937.1. The German DAX index rose 33.77 points, or 1.1 percent, to 3,071.1 and the French CAC-40 index added 9.69 points, or 0.3 percent, to 3,169.82.

     Analysts said German and French stocks were supported by strength in telecommunications companies after France Telecom's stock was upgraded and news of a bond issue.

     Brokers at Goldman Sachs upgraded the stock and France Telecom said it was planning a $3.18 billion bond issue. Goldman also upgraded the European telecom sector to attractive from neutral.

     German issues were led higher by Deutsche Telekom and automakers. Analysts said German carmakers benefited from data Friday that hinted at better export potential.

     In Asia, prices ended higher in moderate trading on the Hong Kong Stock Exchange, lifted by strength in China-related issues. The blue-chip Hang Seng Index, which rose 46.09 points during the previous session, jumped 112.58 points, or 1.2 percent, to 9,834.08.

     Analysts said stocks were lifted as investors acquired an appetite for China-linked issues amid the uncertain global outlook.      Elsewhere, stocks ended higher on the South Korean Stock Exchange, lifted by strength in oil stocks. The Korea Composite Stock Price Index, or Kospi, which fell 2.04 points during the previous session, gained 19.52 points, or 3.1 percent, to 648.06.

     Analysts said the market also drew support from developments over the weekend to ease the crisis in North Korea.

     Prices on the Taiwan Stock Exchange rose to their highest level in more than five months. The key Weighted Index, which rose 37.07 points during the previous session, jumped 140.41 points, or 2.9 percent, to 4,991.26 on hopes for renewed technology spending in the United States.

     Meanwhile, Singapore stocks ended higher for the fourth consecutive session in moderate trading. The key Straits Times Index, which rose 12.08 points during the previous session, rose 38.88 points, or 2.9 percent, to 1,386.05.

     Elsewhere around the Pacific region, prices ended slightly higher in light trading on the Australian Stock Exchange. The blue-chip All Ordinaries Index, which slipped 0.60 points during the previous session, rose 7.40 points, or 0.2 percent, to 3,042.50.

     Meanwhile, markets in Japan were closed for a public holiday. Trading will resume on Tuesday with the Nikkei Stock Average hovering around 8,470.45 after losing 27.48 points last Friday.

www.stockhouse.ca Upward Trend in 2003, Says BMO Financial Group Economic Report 1/13/03 TORONTO, Jan 13, 2003 (Canada NewsWire via COMTEX) --

A steep rise in energy prices and brisk gains for metals and forest products boosted BMO Financial Group's Commodity Price Index in December. BMO's composite index of nineteen commodities important to the Canadian economy rose 5.1 per cent to 117.9 (1993 equals 100) from 112.2 in November.

"Although weak economic conditions in North America during the past two years reduced most commodity prices to well below their recent highs in 2000, the corner has now been turned," said Earl Sweet, Assistant Chief Economist, BMO Financial Group.

"The combination of generally good supply management and a strengthening North American economy should stimulate further gains in the index over the course of 2003," said Sweet. "Commodity prices were generally volatile in 2002, but the BMO Price Index ended the year 20.6 per cent higher than in December 2001."

Much of the rise in BMO Financial Group's Commodity Price Index over the twelve months of 2002 stemmed from sharp increases in its Oil & Gas Index. Spurred by supply concerns - geopolitical in the case of oil and dwindling reserves in conventional North American basins in the case of natural gas - the energy sub-index shot up 5.1 per cent in December to a level more than 62 per cent higher than a year earlier.

The BMO economic report sees the price of the US benchmark West Texas Intermediate as averaging US$25.50/barrel in 2003, although the intra-year range could be as wide as US$15-45/barrel.

"Given the current volatile situations in Venezuela and Iraq and the potential supply responses by the rest of OPEC and Russia, there is huge uncertainty as to the future course of oil prices," said Sweet.

Natural gas prices in western Canada are expected to average US$3.50/mmbtu, up very sharply from US$2.63 in 2002. By December, natural gas prices in western Canada had risen to an average of US$3.97/mmbtu, while the US benchmark Henry Hub traded at US$4.65.

"As high prices in 2002 did not stimulate increased drilling activity, prices will have to rise even further in 2003 to "price out" some demand and improve the economics of imported liquefied natural gas into the US market," said Sweet.

Prices of Metals & Minerals rose 1.1 per cent in December, sustaining a bumpy upward trend that raised the sub-index 8.3 per cent above its year- earlier level. Over the course of the year, nickel prices recorded the strongest advance, climbing 34 per cent as the demand for stainless steel improved and supplies became tight. The next largest price increase for metals accrued to gold, which rose 21 per cent over the twelve months of 2002. Gains for copper, zinc, and aluminum were more restrained, held back by still-large inventories.

"We expect that a strengthening in global industrial production will further lift the sub-index for metal prices. Once again, tight supplies for nickel are likely to sustain its position as the leader in terms of price gains," said Sweet. "Copper should do well as the economy strengthens, while lead, zinc, and aluminum are expected to struggle under the weight of heavy inventories and, in the case of aluminum, soft demand from manufacturers of ground and air transport equipment."

Pricing conditions in 2002 will be remembered as among the most difficult that forest products producers ever faced. Prices of all products but one (oriented strandboard) comprising the Forest Products Index fell in the year - some substantially. Moreover, the majority fell to levels unseen in about a decade. As a result, the Forest Products Index tumbled 12.5 per cent (on an annual average basis), its second steepest decline on record since 1965.

In December, an upturn in lumber prices from particularly depressed levels pulled the Forest Products Index up 1.8 per cent, which is only the second increase in the past nine months.

"For many of the Forestry group's commodities, near-term prospects are likely to continue to be restrained by excess supply," said Sweet. "Nonetheless, prices in the sector should benefit gradually from the strengthening of North American economic activity and its favourable impact on demand later in 2003."

Sweet noted that "consolidation among lumber producers is likely to contribute to higher average lumber prices in 2003, although the trade dispute between Canada and the United States will remain a source of uncertainty".

Weak global demand and excessive inventories will likely inhibit any near-term improvement in pulp prices. However, starting later this year, growing demand and greater supply discipline should help prices shake off their lethargy.

Similarly, resumption of the newsprint price recovery will await clearer signs of stronger consumption by end-users. Once demand picks up - likely before mid-year - the impact on prices should be fairly quick given that newsprint inventories are well contained.

The Agricultural Index's weak result in December (down 8 per cent) belies its strength during the rest of the year. Over the twelve months through December, the Agricultural Index jumped 24.5 per cent as poor growing conditions for grains and oilseeds in major exporting countries such as Canada, the United States, and Australia lead to a substantial tightening of global supplies. Wheat prices soared 26 per cent, from US$3.57/bushel in December 2001, to US$4.49 a year later. Canola and soybean prices also recorded sharp gains, climbing 25 per cent and 30 per cent, respectively, over the twelve months of 2002. The BMO Report anticipates that low global inventories of grains relative to consumption and signs that major exporters may be prepared to reduce or restructure farm support suggest further increases in grain prices. BMO Financial Group's sub-index for Agriculture is expected to rise a further 10 per cent during the next 12 months.

     BMO Financial Group Commodity Price Index for December 2002

                      ---------------------------------------------------
                       Dec. 2002 Level   Per cent change  Per cent change
                      (1993 equals 100)  from month ago   from year ago
-------------------------------------------------------------------------
All Commodities               117.9            5.1              20.6
-------------------------------------------------------------------------
Oil & Gas                     188.6           12.8              62.2
-------------------------------------------------------------------------
Metals & Minerals             105.3            1.1               8.3
-------------------------------------------------------------------------
Forest Products                85.9            1.8              -5.1
-------------------------------------------------------------------------
Agriculture                   101.4           -8.0              24.5
-------------------------------------------------------------------------

The full BMO Financial Group December Commodity Price Index and Report is available on the bank's website at www.bmo.com.

Internet: www.bmo.com

VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION: www.newswire.ca

For further information: Michael Edmonds, Toronto, (416) 867-3996; Ron Monet, Montreal, (514) 877-1101; Laurie Grant, Vancouver, (604) 665-7596

News release via Canada NewsWire, Toronto 416-863-9350

abcnews.go.com — By Haitham Haddadin

NEW YORK (Reuters) - U.S. stocks mostly hugged the flatline at midday on Monday after a rating downgrade on Dell Computer Corp. <DELL.O> and an earnings warning from Duke Energy Corp. <DUK.N> helped reverse an opening advance before key corporate earnings reports this week.

The blue-chip Dow Jones industrial average and the tech-laden Nasdaq rose slightly, while the broader Standard & Poor's 500 inched down a fraction of a point.

Last week, the three major market gauges gained between 2 percent and 4 percent amid a handful of strong earnings outlooks. But Wall Street is looking for confirmation of that guidance in earnings reports this week from several marquee companies plus a host of economic reports such as monthly retail sales, the Producer Price Index and consumer sentiment data.

"This is simply profit taking ahead of all the economic numbers as well the earnings reports due out this week," said Harry Michas, index futures trader at manmarketmonitor.com. "This market ran up pretty well over the past two weeks and I think it's time to take some profits off the table."

An upbeat brokerage call on Intel Corp. <INTC.O>, the chipmaking giant, had helped fuel the early gains in high-tech issues. However, Dell Computer fell after it was downgraded, denting other stocks in the sector. Also weighing on the market was Duke Energy, which sank nearly 12 percent after warning that earnings for 2002 would fall short of forecasts.

The Nasdaq Composite <.IXIC> edged up 0.79 of a point, or 0.05 percent, to 1,448.51, after rising more than 1 percent. The Dow Jones average <.DJI> was up 4 points, or 0.04 percent, at 8,788.66. The S&P 500 Index <.SPX> shed 1 point, or 0.12 percent, to 926.50.

U.S. Treasuries slipped as stocks rallied earlier. But after stocks fizzled, bonds clawed back some losses.

The most-active issue on the New York Stock Exchange was Canada's Nortel Networks Corp. <NT.TO> <NT.N>, up 13 cents to $2.48, or 5.5 percent. Nortel's stock touched a seven-month high on Friday as investors bet on a better 2003 for telecom equipment suppliers, spurred by some optimistic analyst calls.

The reversal in the indexes coincided with fresh economic data showing a sharp drop in the Kansas City Federal Reserve's regional manufacturing index, which covers manufacturing activity in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

"Timing wise, the drop in the Kansas City Fed Manufacturing index has caused a nosedive in stock index futures," said one stock index futures trader on the Chicago Mercantile Exchange. "The move downward was a surprise because the first half hour (of pit trade) seemed to be pointing the markets toward higher levels. This would be an excuse to take profits off the table."

The decline in the Kansas City Fed index suggests care should be taken in gauging whether national factory activity has picked up. The Kansas City manufacturing index registered -20 for December; of the 96 firms surveyed, more saw production drop from November's level than those who saw it rise.

SHORTING THE SPIDERS

"There's heavy selling on the Nasdaq futures and the shorts are also piling up at 930 on the S&P. They are shorting the spiders (exchange-traded S&P index fund) at 930. That's resistance," said Anthony Iuliano, head equity trader at Glenmede Trust Co.

Nasdaq 100 futures were down 12.50 points at 1,079, and S&P futures fell 4.30 points to 922.20. Earlier, both were higher.

"The traders are taking some profits. There's still a lot of problems out there with the geopolitical situation and earnings are not that fascinating so there's some concern over earnings," Iuliano said.

Intel was up 10 cents at $17.52 after earlier in the session rising as high as $17.98. Salomon Smith Barney raised its 2003 earnings estimates for Intel, which reports fourth-quarter earnings after the close on Tuesday.

Dell fell after J.P. Morgan Chase cut its rating for the computer maker to "Neutral" from "Overweight" because of "an increasingly aggressive industry pricing environment."

Dell declined $1.02, or 4 percent, to $26.13. Rival Hewlett-Packard <HPQ.N>, a Dow stock, lost 23 cents to $20.62.

Duke Energy fell $2.63, or 12.5 percent, to $18.37, and was the second-most active issue on the New York Stock Exchange. Duke also said the sluggish U.S. economy would prevent any near-term recovery of the merchant energy business.

Besides Intel, several other tech heavyweights, including International Business Machines Corp. <IBM.N>, report this week. Other big companies set to hand in their scorecards include General Motors Corp. <GM.N> and General Electric Co. <GE.N>, two of the 30 Dow industrials.

"The focus this week will be on corporate earnings announcements," Ken Tower, chief strategist at CyberTrader, Inc. told clients in a note. "The economy has been mixed over the past three months, so expect the same from earnings. For the markets, that means volatility, particularly since trouble in Venezuela and Iraq remain unresolved."

AOL'S CASE STEPS DOWN

After the resignation of Steve Case as chairman of AOL Time Warner Inc. <AOL.N>, AOL's stock rose 28 cents, or 1.9 percent, to $15.16. Effective in May, Case's resignation completes the exodus of the key architects of the $106.2 billion merger, which irked investors by not delivering on its promise to supercharge growth by marrying old and new media.

Early in the session, stocks got a lift as oil prices fell from recent two-year highs after OPEC's decision on Sunday to lift output. The Organization of Petroleum Exporting Countries, at an emergency meeting, increased production limits by 1.5 million barrels per day, or 7 percent, to compensate for six weeks of supply disrupted by a strike in Venezuela.