The

Dow Jones Industrial Average

started off an abbreviated trading week up about a dozen points to teeter around 7000 before falling back into negative territory close to noon.

The

S&P 500

and technology-laden

Nasdaq Composite Index

were also down amid average trading volume.

Accounting for the majority of the Dow's initial gain was tobacco titan

Philip Morris

(MO) - Get Report

, up 3 at 128 3/8. On Friday, a West Virginia judge dismissed the essential claims of that state's attorney general's Medicaid reimbursement lawsuit against the company.

The number-two cigarette manufacturer,

RJR Nabisco

(RN)

, also moved higher on the news, up 1/2 to 36, but the number three

B.A.T Industries PLC

(BTI) - Get Report

was unchanged at 17 1/16.

Wall Street was focused on developments in the thrift and banking industries. Following

H.F. Ahmanson's

(AHM)

hostile offer to buy

Great Western Financial

(GWF)

for close to $6 billion in stock, or $42.53 per share, Great Western jumped 8 3/4 to 43 and Ahmanson rose 2 to 42 1/2. There has been no official response yet to the bid.

A merger between the nation's two largest savings and loans, both located in California, would create a company with $93 billion in assets. Thrift consolidation has been an ongoing trend in the Golden State. Privately held

First Nationwide Holdings

of San Francisco recently acquired

Cal Fed Bancorp

of Los Angeles for $1.2 billion, and last summer

Washington Mutual

(WAMU)

bought

American Savings Bank

of Irvine for $1.4 billion.

Industry followers and investors apparently expect the pattern to continue, as they bid up several California thrifts.

Glendale Federal Bank

(GLN)

leaped 2 1/8 to 27 3/4,

Golden West Financial

(GDW)

added 1 3/4 to 73 3/4 and

Coast Savings Financial

(CSA) - Get Report

gained 1 7/8 to 45 1/2.

In another deal,

CCB Financial

(CCB) - Get Report

said it had finalized its agreement to buy

American Federal Bank

for $28.86 per share in a stock swap that is based on CCB's five-day moving average ending on Friday. American Federal Bank is up 5 to 26 7/8, while CCB Financial slipped 1 7/8 to 66 1/8.

By Avi Stieglitz

astieglitz@thestreet.com