U.S. stocks on Monday shifted mostly up, trying to bounce back from the previous session's steep losses, as battered financial shares weighed and crude-oil futures shifted higher, turning the market's focus away from a $4 billion takeover in the agricultural space.

"It's still the financials, they are just a disaster, and breaking down on a daily basis. The market is not going anywhere until the financials stabilize," said Peter Boockvar, equity strategist at Miller Tabak.

The Dow Jones Industrial Average (DJI) was up 15.63 points at 11,858.32, with 16 of its 30 components trading higher, lately led by pharmaceutical giant Merck Co. Inc. (NYSE:MRK) (MRK), up 2.2%.

Heavy decliners on the Dow included General Motors Corp. (NYSE:GM) (GM), off 4.6%, and American International Group Inc. (NYSE:AIG) (AIG), down 3.8%.

The blue-chip barometer's other financials also fell: Shares of Citigroup Inc. (NYSE:C) (C) traded down 3.1%, J.P. Morgan Chase Co. (NYSE:JPM) (JPM) sank 1.7%, Bank of America Corp. (NYSE:BAC) (BAC) lost 3.4%, and American Express Co. (NYSE:AXP) (AXP) dropped 0.2%.

The financial sector was slammed by reports of layoffs at investment banking divisions of Citigroup (NYSE:C) and Goldman Sachs Group Inc. (NYSE:GS) (GS), along with downgrades of the financial and consumer discretionary sectors.

Along the same lines, Banc of America Securities lowered second-quarter estimates for both Merrill Lynch Company Inc. (NYSE:MER) (MER) and UBS AG (NYSE:UBS) (UBS) saying mortgage-related exposures are likely to weigh on the bottom lines of both investment firms. .

Dow gains were fronted by its oil producers, with Exxon Mobil Corp. (NYSE:XOM) (XOM) adding 2.2% and Chevron Corp. (NYSE:CVX) (CVX) gaining 1.5%.

Oil prices were again a key consideration in investors' decisions. Over the weekend, Saudi Arabia pledged to boost production by 200,000 barrels a day. .

In Monday's energy trading, crude was up, rising $1.37 to $136.73 a barrel in electronic trade on Globex.

"The issue of oil is just a pile-on. It's the banks that are driving stocks," said Boockvar.

On Capitol Hill, four energy analysts told Congress the price of gasoline could fall to about $2 a gallon within 30 days of passage of a law to limit speculation in energy-futures markets. .

The S&P 500 (SPX) gained 2.38 points to 1,320.31. Of the S&P's 10 industry groups, the financial sector suffered the most, off 2.2%, followed by consumer discretionary, down 1.4%.

Shares of Circuit City Stores Inc. (NYSE:CC) (CC) dove 18.7%, as the electronics retailer explored its options after a buyout offer from Blockbuster Inc. (NYSE:BBI) (BBI)

Elsewhere in the retail sector, shares of J.C. Penney Co. (NYSE:JCP) (JCP) got a lift, up 1.3%, after an upgrade from Deutsche Bank. Shares of other retailers were mixed. .

Energy set the pace for S&P sector gainers, up 3.2%.

The technology-laden Nasdaq Composite (RIXF) fell 4.62 points to 2,401.47.

Volume on the New York Stock Exchange neared 675 million shares, with decliners topping advancers nearly 2 to 1. On the Nasdaq, 526 million shares traded, and decliners outpaced advancing issues more than 2 to 1.

The decline followed an intense drilling of U.S. stocks Friday, when the Dow industrials tumbled 220 points, pummeled over worries about oil prices and the health of financial companies, to peg the week's losses at 3.7%.

M&A action

On the deals front Monday, Bunge Ltd. (NYSE:BG) (BG) said it would acquire stock and assumed debt in a deal for Corn Products (NYSE:CPO) (CPO) valued at about $4.8 billion. .

And, clearing the way for the largest leveraged buyout on record, Canada's Supreme Court ruled Friday that the purchase of telecom giant BCE Inc. (NYSE:BCE) (BCE) for about $35 billion should be allowed to proceed. Shares of BCE gained 7.3%. .

Republic Services Inc. (NYSE:RSG) (RSG) reached terms on a plan to buy Allied Waste Industries Inc. (NYSE:AW) (AW) for $14.07 a share in Republic stock. .

Overseas, the Nikkei 225 fell 0.6% Monday in Tokyo , while the pan-European Dow Jones Stoxx 600 index ended fractionally lower at 294.81. .

    (END) Dow Jones Newswires   06-23-08 1443   Copyright (c) 2008 Dow Jones & Company, Inc.