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NEW YORK - US blue chips nudged the Dow up today after Wal-Mart reported robust sales at the weekend but a drop in Microsoft Corp. offset fresh merger and acquisition activity and oil futures pared gains.

Microsoft was the biggest drag on the three major indexes, but the small declines in the S&P and the Nasdaq followed the S&P booking its strongest weekly gain since August last week.

The drop in Microsoft's stock came as financial weekly Barron's, in its Feb. 5 issue, suggested Microsoft is more likely to fall than rise with the release of its Vista operating system, as expectations for Vista's success were already factored into its stock's price.

This overshadowed the reversal in the price of crude oil, which backed down from one-month highs near US$60 a barrel.

"Oil's come off ... that will give the market a little boost, but it's marginal," said Stephen Carl, principal and head of US Equity Trading, The Williams Capital Group LP in New York, who added that after last week's advance, the market was in a small lull.

Microsoft weighed on all three major indexes as its shares fell 2.2 per cent to US$29.52, reversing all the gains of the last month in its largest one-day decline in almost six months.

Meanwhile, Wal-Mart Inc. rose 1.5 per cent to US$48.78, having hit a three-month high earlier at US$48.90. The world's biggest retailer estimated on Saturday that January sales rose a stronger-than-expected 2.2 per cent at its US stores open at least a year.

Among decliners on the S&P 500 were shares in education lenders SLM Corp. and Nelnet Inc., which fell after US President George W. Bush's proposal to cut grants for education in his fiscal 2008 budget.

SLM stock shed 10 per cent to US$41.76, a two-year low, while NelNet shares fell 8.3 per cent to US$25.41 in their largest one-day fall since Dec. 22.

Crude oil for March delivery was off 0.3 per cent at US$58.84, having hit a high of US$59.95 earlier in the day as a cold snap hit the US northeast, a major heating oil market.

- REUTERS