US STOCKS-Indexes flat as subprime worries offset takeovers

(Updates to early morning)

By Kristina Cooke

NEW YORK, June 18 (Reuters) - U.S. stocks were little changed on Monday as lingering worries about the subprime mortgage market offset optimism about corporate takeovers.

Shares of Bear Stearns fell 1.5 percent after the Wall Street Journal reported that investment bank Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) has seized $400 million in assets of a troubled hedge fund at Bear Stearns Cos. Inc. BSC.N. For details see [ID:nN16314376].

Shares of Alcoa (AA.N: Quote, Profile, Research, Stock Buzz) gained 2.1 percent after the Times newspaper in London reported BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research, Stock Buzz) (BLT.L: Quote, Profile, Research, Stock Buzz), the world's biggest mining group, has revived plans for a $40 billion takeover of the aluminum producer.

Shares of Dow Jones edged up after the Financial Times and the Wall Street Journal reported General Electric Co. (GE.N: Quote, Profile, Research, Stock Buzz) and Pearson Plc (PSON.L: Quote, Profile, Research, Stock Buzz) may challenge News Corp.'s $5 billion bid for Dow Jones & Co.

"Money still seems to be plentiful, and you are still seeing multiple potential acquirers for businesses," said Craig Hester, CEO of Hester Capital Management in Austin, Texas.

"But the Bear Stearns story is indicative that we have not seen the end of the problems in the subprime market and its impact on the economy and financial markets," Hester said. "I think the market will continue to be choppy."

The troubled subprime mortgage market offers risky loans to borrowers with poor credit histories.