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Stocks Flat to Lower Ahead of Data

Tyco confirms a breakup and lowers earnings guidance.

Stocks were slightly lower Friday as traders got defensive ahead of inflation and retail sales data and sorted through another cascade of corporate dealmaking.

Index futures recently showed the

S&P 500

trading a point below fair value, while the Nasdaq 100 was set to open unchanged. The 10-year Treasury bond was down 4/32 in price to yield 4.42%, 3 basis points above the two-year note, while the dollar fell against the euro and rose against the yen.

Oil was higher after Iran threatened to halt U.N. nuclear inspections if Western countries make good on threats to bring the country before the Security Council. Iran has taken steps this week to restart nuclear research, raising concerns about retaliatory sanctions. February crude was recently up 2 cents to $63.96 a barrel.

Overseas markets were mixed, with London's FTSE 100 recently falling 0.6% to 5702 while Germany's Xetra DAX fell 1% to 5485. In Asia, Japan's Nikkei rose 0.1% overnight to 16,455, while Hong Kong's Hang Seng added 0.4% to 15,788.

Two big pieces of economic data will help direct trading Friday. At 8:30 a.m. EST, the Commerce Department is expected to say that retail sales rose by 1% in December, while the Labor Department is expected to report a 0.4% rise in its headline and core producer price index.

Stocks ended with losses Thursday, with the

Nasdaq Composite

posting its first losing session of 2006, as profit-takers swooped in after a nearly uninterrupted rally since New Year's. The

Dow Jones Industrial Average

lost 0.7% to 10,962, ending a three-day stint above 11,000. The S&P 500 fell 0.6% to 1286.

Dominating the corporate docket Friday was the takeover battle around

Guidant

(GDT)

, where

TheStreet Recommends

Boston Scientific

(BSX) - Get Boston Scientific Corporation Report

last night sweetened its offer for the medical-device company to $73 a share from $72. Boston Scientific says Guidant has until 4 p.m. to decide between its offer and

Johnson & Johnson's

(JNJ) - Get Johnson & Johnson Report

$68-a-share bid.

American International Group

(AIG) - Get American International Group, Inc. Report

reportedly will pay more than $1 billion to settle civil charges that it used misleading accounting to burnish its financial statement over five years. The deal would end probes by state authorities in New York and the

Securities and Exchange Commission,

the

Wall Street Journal

said. Former CEO Maurice Greenberg is not a party to the settlement talks.

Tyco

(TYC)

confirmed a plan to break itself into three companies through tax-free spinoffs of its healthcare and electronics units. The company also lowered its estimate of first-quarter earnings to 38 cents a share from 40 cents to 42 cents.

The SEC told

IBM

(IBM) - Get International Business Machines Corporation Report

it has opened a formal investigation into disclosures surrounding the company's first-quarter earnings statements. The quarter was the first in which the company expensed stock-options grants to employees.