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The U.S. government said its investigation of a mad cow outbreak in the Northwest was progressing slowly, and Wall Street's reaction turned cautious Friday.

In a conference call, the Agriculture Department said investigators were still trying to determine the infected cow's birth herd. The USDA said that all potentially affected animals were under quarantine but that an effort to recall 10,410 pounds of beef hadn't been completely successful, because the initial notice came out Christmas Eve. The recall will continue over the weekend.

To reassure the public, the USDA said that the recall -- which represents meat from 20 carcasses -- reflected an "overabundance of caution," because infected nervous tissue is very unlikely to make it to market through ground beef. The agency also stressed its diligence in testing sick and diseased animals and said it was working on a system to electronically track animals from birth to make investigations easier.

"In 2002, we tested 19,990 animals, targeting high-risk populations, those with nervous system disorders or non-ambulatory animals," said Ron DeHaven, chief veterinary officer for the USDA, noting that the agency tested more than 20,000 animals in fiscal 2003. "We made a determination to increase that testing to 38,000 in the upcoming fiscal year."

The Friday conference call followed an announcement on Christmas Day that a laboratory in Waybridge, England, had independently confirmed the outbreak and would be performing more tests.

In reaction to the mad cow outbreak, analysts were retooling their earnings estimates and investment opinions for potentially affected companies. On Friday, Morgan Stanley analyst Kenneth Zaslow downgraded shares of

Tyson Foods

(TSN) - Get Tyson Foods, Inc. Class A Report

to equal weight from overweight, telling investors the scare will reduce profit margins, which were already in danger of shrinking.

"The discovery of mad cow disease in the U.S. exacerbates our ongoing concern that beef packer margins will be lower on a year-over-year basis during fiscal 2004," said Zaslow, who cut his estimate on 2004 earnings to $1, lower than the $1.08 expected by Wall Street. "Beef export sales likely will be adversely impacted, as Japan, South Korea and Mexico -- Tyson's largest beef buyers -- have placed bans on U.S. beef."

Those three markets receive about 90% of all exported U.S. beef. Tyson's shares were down 24 cents, or 1.4%, to $12.66. They closed Tuesday at $13.98.

But while Morgan Stanley soured on Tyson's shares, the brokerage also said that the mad cow outbreak "will not evolve a structural issue" and could create a buying opportunity in the next six months. Furthermore, the brokerage said that Tyson's beef operation will have less of an impact on profits going forward, with chicken sales expected to account for 56% of Tyson's operating profit in 2004 while beef slides to 19%.

Other analysts were similarly optimistic that the mad cow outbreak would have a limited impact on the beef industry.

"We think this single outbreak is not likely to alter domestic beef consumption," said John McMillin, analyst at Prudential Equity Group. "Some consumers may trade up to whole cuts or move to other meats, but Americans love their beef, and right now we do not seen even hamburger demand really slowing unless the media attention builds."

Meanwhile, the restaurant sector, which was battered on Wednesday when news of the outbreak hit markets, was posting moderate gains.

McDonald's

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(MCD) - Get McDonald's Corporation Report

rose 13 cents, or 0.5%, to $24.09, while

Wendy's

(WEN) - Get Wendy's Company Report

rose 27 cents, or 0.7%, to $38.06.

Other names caught a mad cow pop, especially those related to the testing of meat.

Bio-Rad Labs

(BIO) - Get Bio-Rad Laboratories, Inc. Class A Report

continued to rally, gaining $1.83, or 3.1%, to $61.65, while

Strategic Diagnostics

(SDIX)

, which makes agricultural test kits, was up 11 cents, or 2.2%, to $5.10.

Advanced ID

(AIDO.OB)

, which trades over the counter and touted its solution for the mad cow outbreak, rose 38 cents, or 55.9%, to $1.06, on 20 times usual volume.

VI Technologies

(VITX)

, which makes products to remove viruses from blood, rose 8 cents, or 6.6%, to 1.30%.

Non-beef and non-traditional meat producers were also on the move.

Cal-Maine Foods

(CALM) - Get Cal-Maine Foods, Inc. Report

, the nation's largest fresh egg producer, rose $4.48, or 12.8%, to $39.61, while

Hain Celestial

(HAIN) - Get Hain Celestial Group, Inc. Report

, which has kosher, organic and natural meat offerings, rose 84 cents, or 3.5%, to $24.56.

Cal-Mine was said to be moving on speculation that Atkins dieters would seek their protein in eggs.