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Stocks mixed amid worries over financials

NEW YORK - Wall Street ended a wobbly session with a mixed performance yesterday as concerns about the financial sector eroded enthusiasm over a decline in oil prices and a report that signaled modest growth in the service economy.

NEW YORK - Wall Street ended a wobbly session with a mixed performance yesterday as concerns about the financial sector eroded enthusiasm over a decline in oil prices and a report that signaled modest growth in the service economy.

The worries about financial companies flared after Moody's Investors Service warned it might downgrade its ratings of bond insurers Ambac Assurance Corp. and MBIA Insurance Corp.

Some investors looking to sidestep the troubled financial sector moved into technology stocks, giving the Nasdaq composite the biggest advance of the major indexes.

The decline in oil at times appeared to help lift market sentiment. Light, sweet crude fell $2.01, to $122.30 a barrel, on the New York Mercantile Exchange after the Energy Department reported that demand for gasoline had receded last week and that fuel inventories had risen more than expected. Still, retail gasoline prices advanced to a fresh record above $3.98 a gallon.

The Institute for Supply Management's service-sector index registered 51.7 percent for May; while any reading above 50 signals economic expansion, the figure was down from 52 in April. Still, the number did indicate that the economy, while behaving erratically, was not in a steady downturn.

Renewed concerns about the health of the financial sector kept some buyers at bay.

The Dow Jones industrial average fell 12.37, or 0.10 percent, to 12,390.48. The Standard & Poor's 500 index fell 0.45, or 0.03 percent, to 1,377.20, while the Nasdaq rose 22.66, or 0.91 percent, to 2,503.14.

The latest evidence of uneasiness about the financial sector came from Moody's announcement that it was reviewing its "AAA" ratings for Ambac and MBIA. The rating agency said the "most likely" outcome of the review would be a downgrade. Ambac fell 51 cents, or 17.00 percent, to $2.49, while MBIA fell $1.06, or 15.84 percent, to $5.63.

One financial-services company that had weighed on the market Tuesday showed a rebound. Lehman Bros. Holdings Inc. rose 79 cents to close at $31.40, after Merrill Lynch & Co. Inc. raised its rating on the company. Lehman denied rumors Tuesday that it had tapped the Federal Reserve's discount window because of cash problems. Reports Tuesday that the investment bank needed to raise up to $4 billion in capital touched off further concerns about the health of the financial sector.

The J.M. Smucker Co. said it had agreed to acquire the Folgers coffee brand from Procter & Gamble Co. in a nearly $3 billion stock deal. Smucker shares rose 12 cents to close at $53.87, while P&G advanced $1.04 to close at $66.45.

Shares of United Airlines' parent, UAL Corp., rose 61 cents, or 7.15 percent, to $9.14 after the company said it planned to cut as many as 1,100 more jobs, remove 70 fuel-hungry aircraft from its fleet, and reduce domestic capacity to trim costs in the face of surging energy costs. The nation's No. 2 carrier previously had said that it planned to cut 500 jobs and that it would mothball some of its least fuel-efficient aircraft.

The Russell 2000 index of smaller companies rose 4.71, or 0.64 percent, to 743.71.

Overseas, Japan's Nikkei stock average rose 1.59 percent. Britain's FTSE 100 closed down 1.45 percent, Germany's DAX index fell 0.77 percent, and France's CAC-40 declined 1.38 percent.