* Divided government in Rome could hinder euro zone reform
* Amgen shares up as competitor recalls drug
* Barnes & Noble rallies as chairman makes buy-back offer
* Dow, S&P off 0.1 pct, Nasdaq up 0.1 pct
By Rodrigo Campos
NEW YORK, Feb 25 (Reuters) - U.S. stocks edged lower on
Monday after fears of a divided parliament in Italy, the euro
zone's third-largest economy, rekindled worries about the
currency union's stability.
The center-right coalition led by former prime minister
Silvio Berlusconi was leading in the race for the Italian
Senate, dashing hopes of a pro-reform, center-left victory seen
as crucial to dig the euro zone out of a debt crisis.
The market had hoped for a center-left victory because it
would continue the path to pay down Italian debt, said Art
Hogan, managing director of Lazard Capital Markets in New York.
"What we don't want to hear is a renewed fear about a euro
zone fracture," he said.
The S&P 500 was nonetheless near highs not seen in five
years, and 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.
Barnes & Noble Inc climbed 9 percent to $14.73 after
its chairman offered to buy the bookseller's declining retail
The Dow Jones industrial average fell 22.5 points or
0.16 percent, to 13,978.07, the S&P 500 lost 2.15 points
or 0.14 percent, to 1,513.45 and the Nasdaq Composite
added 3.18 points or 0.1 percent, to 3,164.99.
The Nasdaq received support from Amgen Inc, up 3.8
percent to $90.16 after a voluntary recall from a competitor to
its top-selling red blood cell booster Epogen.
European shares trimmed gains, edging up 0.1
percent and Italy's main FTSE MIB was up 0.7 percent
after earlier gaining near 4 percent.
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 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 having reported results, 69
percent of 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.