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MIDDAY MARKETS: Lucent plunge adds to tech woes

Technology stocks struggled to make small gains at midday Wednesday, shrugging off a dour economic report and a 20 percent plunge of Lucent shares. The Nasdaq rose 14.33 to 1,687.33, and the Dow Jones industrial average gained 108.42 to 9.594.13.

The Inter@ctive Week @Net Index rose 3 to 142.27.

Lucent (NYSE: LU) shares slipped as much as 20 percent Wednesday on rumors it might file for bankruptcy. The stock bounced back, down just 90 cents, or 11 percent, to $6.95, after the company denied the speculation.

In economic news, the National Association of Purchasing Management (NAPM) said its gauge of non-manufacturing activity fell to 50.3 in March from 51.7 in February, only slightly above January's reading of 50.1. Analysts had expected the index to dip to 51.5.

A key barometer of the U.S. service sector, the NAPM number for March suggests that the economy is far from a recovery; a number above 50 indicates the sector is expanding, while anything below 50 represents contraction.

The number "basically confirms that things are slowing down overall throughout the economy," Ralph Kauffman, chair of NAPM's non-manufacturing committee told Reuters.

Investors received yet another profit warning in the business-to-business sector. Following Tuesday's software landslide, Commerce One (Nasdaq: CMRC), up $1.07 to $6.68, said Wednesday that it expects to post a loss of 11 cents per share for the quarter.

Rational Software (Nasdaq: RATL) issued a warning on Tuesday evening. The company said its business will improve in the second half of its fiscal year, but that was apparently too far away for analysts, who downgraded the stock Wednesday. Investors drove shares up $1.47 to $15.41, despite the downgrades.

Europe's biggest software group SAP AG (NYSE: SAP) and Internet media company Yahoo (Nasdaq: YHOO), up $1 to $12.38, said they were planning a far-reaching partnership to develop a joint business portal.

Amazon (Nasdaq: AMZN) fell 6 cents to $8.57, and AOL Time Warner (NYSE: AOL) rose $2.03 to $35.93.

Cisco Systems (Nasdaq: CSCO) rose 31 cents to $14.06, Intel (Nasdaq: INTC) lost 94 cents to $24.06, Oracle (Nasdaq: ORCL) rose 31 cents to $13.56 and Microsoft (Nasdaq: MSFT) was up 44 cents to $53.81.

ZDII staff and Reuters contributed to this roundup.