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Equities in positive territory NEW YORK: U.S. stocks were up at midday on Thursday after a new report showed inflation is under control, calming fears the Federal Reserve might aggressively hike interest rates at the beginning of February.

Internet, banking, telecommunications and oil driller stocks led the market up while transportation and semiconductor equipment makers were sliding.

The Dow Jones industrial average was up 17 points, or 0.15 percent, at 11,568. Among Dow components Microsoft Corp. was down 3-3/8 at 102-7/16 but JP Morgan & Co. Inc. was up 2-3/4 at 122-3/8.

The technology-rich Nasdaq Composite index was up 26 points, or 0.68 percent, at 3,876, after rising more than 2 percent within minutes of the opening bell.

The broader Standard & Poor's 500 index was up 6 points, or 0.47 percent, at 1,438.

Wall Street is expecting a February rate hike of at least a quarter percentage point, plus another quarter point in February or March.

Retail sales were slightly stronger than expected for December, rising 1.2 percent compared with the 1 percent expected by economists polled by Reuters. Excluding autos, retail sales rose by 1.4 percent, the biggest rise since April 1996.

Advancing stocks outpaced declines by 15 to 11 with more than 444 million shares traded on the New York Stock Exchange. There were 70 stocks at new highs and 42 at new lows.

In corporate news, Warner-Lambert Co. said its board authorised talks with Pfizer Inc. In doing so, it jeopardises its $53.8 billion merger plans with American Home Products Corp.

Pfizer was up 5/8 at 35-11/16, Warner-Lambert was down 1/16 at 86-3/4 and AHP was up 1-9/16 at 43-3/4.

UAL Corp., the parent of United Airlines, issued a profit warnings and saw its stock dip 9-3/8 to 65-3/8.

Applied Materials Inc., the world's largest maker of semiconductor manufacturing equipment, said it would buy Etec Systems Inc. in a stock deal valued at about $1.8 billion. Applied Materials was down 5-15/16 at 121-1/8 and Etec was up 23-13/16 at 73-11/16.

U.S. Trust was up 39-7/16 at 118-5/16 after the world's largest discount broker, Charles Schwab Corp., said it would buy the 147-year-old investment management firm to form a full-service brokerage. Schwab was down 1-9/16 at 36-1/16.

Clothing retailer Tommy Hilfiger was down 3-3/16 at 16 after it issued a third-quarter profit warning, citing pricing pressure for a disappointing season. Both Morgan Stanley Dean Witter and Merrill Lynch cut their investment rating on the stock.

Internet audio company RealNetworks was up 15-1/2 at 141-3/4 after Deutsche Banc Alex. Brown started coverage of the stock with a strong buy rating and set an 18-month price target of $250.-Reuters

Treasuries move up

NEW YORK: U.S. Treasuries remained higher in early afternoon trade on Thursday after the Treasury said it plans to buy back $30 billion in debt this year and after release of strong December retail sales data.

Traders said the Treasury's plan, which would pull supplies out of an increasingly crowded market for various fixed income securities, added bullishness to a market weighed by supply fears and concerns interest rates are heading higher.

But traders and economists alike were looking beyond the Treasury's buyback plan and economic data to Federal Reserve Chairman Alan Greenspan's speech tonight in New York for clues of what to expect from the Fed.

"The buyback was a factor in the market this morning, but I think traders would rather hear something bullish from Greenspan," said Vincent Verterano, a dealer at Nomura Securities International.

"They want to see if Greenspan says anything tonight and take it from there. Right now, the market's still negative," he said. Retail sales, minus automobiles, rose 1.4 percent in December, or more than twice the market's expectations. The PPI rose 0.3 percent -- exactly as economists expected.

"The data's one thing and Mr. Greenspan's feelings about it are another," said Carol Stone, senior economist at Nomura Securities International.

Some saw in the numbers evidence the so-called New Economy was rearing its head, while others expected the data might cause the Fed's stance toward controlling inflationary pressures to grow more hawkish.

The market is virtually certain the Fed's interest rate-setting arm, the Federal Open Market Committee (FOMC), will raise its key federal funds rate by a quarter percentage point to 5.75 percent when it meets on Feb. 1 and 2.

But many also believe the FOMC will hike rates -- by a quarter percentage point each time -- two to four times in 2000.

"I really want to wait till Greenspan speaks tonight and see the CPI (consumer price index) numbers tomorrow. But chances are I'm going to move to a more aggressive tightening forecast," said Henry Willmore, senior economist at Barclays Capital.-Reuters