(Corrects to show AB InBev, not Constellation Brands, is taking
over Grupo Modelo)
* U.S. jobless claims hint at firming job market
* Berkshire and 3G Capital to buy Heinz, whose shares soar
* Constellation up after revised AB InBev-Modelo deal
* Indexes: Dow, S&P flat; Nasdaq down 0.1 pct
By Angela Moon
NEW YORK, Feb 14 U.S. stocks erased earlier
losses to trade flat by late morning on Thursday as a flurry of
M&A deals and better-than-expected jobs data fed optimism to the
market, although signs of economic weakness in Europe and Japan
curbed appetite for risky assets.
Among the M&A announcements, shares of H.J. Heinz Co
jumped 20 percent to $72.50 after it said Warren Buffett's
Berkshire Hathaway and 3G Capital will buy the company
for $72.50 a share, or $28 billion including debt.
Also supporting the market, U.S. data showed the number of
Americans filing new claims for unemployment benefits fell more
than expected in the latest week. But data out of Europe showed
a contraction of 0.6 percent in gross domestic product in the
euro zone, the steepest for the bloc since the first quarter of
2009. Japan's GDP shrank 0.1 percent in the fourth quarter,
crushing expectations of a modest return to growth.
"The only reason a company buys another company is because
they see an upside. Even though we are at multiyear highs, this
kind of activity shows that there is more room for a rally,
feeding optimism to the market," said Randy Frederick, director
of trading and derivatives at Charles Schwab.
"The jobless claims numbers were solid, and with the
European market closing, the news out of Europe is pretty much
done for the day."
But Frederick added the market would have to see small
corrections before breaking above current levels, where indexes
have been hovering for almost two weeks. The S&P 500 is up more
than 6 percent so far this year, near its highest level since
The Dow Jones industrial average was down 1.20
points, or 0.01 percent, at 13,981.71. The Standard & Poor's 500
Index was up 0.03 points, or 0.00 percent, at 1,520.36.
The Nasdaq Composite Index was down 2.65 points, or
0.08 percent, at 3,194.23.
Constellation Brands soared more than 31 percent to
$41.80 after AB InBev's deal to take over Mexican brewer Grupo
Modelo was revised to grant Constellation
perpetual rights to distribute Corona and other Modelo brands in
the United States. AB InBev ADRs gained 5.9 percent to
American Airlines and US Airways Group said they
plan to merge in a deal that will form the world's biggest air
carrier, with an equity valuation of about $11 billion. US
Airways shares fell 2.4 percent to $14.31.
Shrinking European economies translated to a 5-percent drop
in revenue from the region for Cisco Systems, which
nonetheless beat estimates as it reported its results late
Wednesday. The company's shares slid 1.4 percent to $20.84.
General Motors Co reported a weaker-than-expected
fourth-quarter profit, also citing bigger losses in Europe
alongside lower prices in its core North American market. The
stock was off 0.8 percent at $28.42.
(Reporting By Angela Moon; Editing by Nick Zieminski)