* Divided government in Rome could hinder euro-zone reform
* Amgen shares up as competitor recalls drug
* Barnes & Noble rallies as chairman offers to buy part of
* Dow off 0.1 pct, S&P 500 down 0.2 pct, Nasdaq up 0.1 pct
By Rodrigo Campos
NEW YORK, Feb 25 (Reuters) - U.S. stocks mostly fell on
Monday on fears that a divided parliament in Italy would get in
the way of the country's reforms and hamper the euro zone's
Election projections showed the center-right coalition led
by former prime minister Silvio Berlusconi was leading in the
race for the Italian Senate, contradicting initial exit polls
and raising the specter of deadlock in parliament.
Earlier polls pointing to a center-left victory lifted
stocks in Milan and other European markets on investors' belief
that they would continue the path to pay down Italian debt, said
Art Hogan, managing director of Lazard Capital Markets in New
"What we don't want to hear is a renewed fear about a euro-
zone fracture," he said.
Last week, the benchmark S&P 500 closed below its 14-day
moving average on Wednesday for the first time this year. At
midday, the S&P 500 was trading just below that level, now near
The index was, nonetheless, still near highs not seen in
five years, as bets on a strong U.S. economy have given equities
support. The S&P 500's slight fall last week was the first
weekly drop after a seven-week string of gains.
Banks and other financial stocks led Monday's decline on
concern about the sector's exposure to Italy's massive debt. The
KBW Bank Index fell 0.7 percent.
The Dow Jones industrial average slipped 18.58 points
or 0.13 percent, to 13,981.99. The Standard & Poor's 500
shed 2.30 points or 0.15 percent, to 1,513.30. But the Nasdaq
Composite rose 3.03 points or 0.10 percent, to 3,164.85.
Barnes & Noble Inc shares climbed 11.9 percent to
$15.12 after the bookseller's chairman offered to buy its
declining retail business.
The Nasdaq received support from Amgen Inc, up 4.2
percent at $90.47, after a rival issued a voluntary recall of
its only drug, an anemia treatment that competes with Amgen's
top-selling red blood cell booster, Epogen.
The FTSEurofirst-300 index of top European shares
unofficially closed up 0.1 percent and Italy's main FTSE MIB
ended up 0.7 percent after earlier gaining near 4
U.S. equities will face a test with the looming debate over
the so-called sequestration, U.S. government budget cuts that
will take effect starting on Friday if lawmakers fail to reach
an agreement over spending and taxes. The White House issued
warnings about the harm the cuts are likely to inflict on the
economy if enacted.
With 83 percent of the S&P 500 companies having reported
results so far, 69 percent beat profit expectations, compared
with a 62 percent average since 1994 and 65 percent over the
past four quarters, according to Thomson Reuters data.
Fourth-quarter earnings for S&P 500 companies are estimated
to have risen 6 percent, according to the data, above a 1.9
percent forecast at the start of the earnings season.