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US STOCKS-Wall St down modestly on earnings caution; Merck gains

* Investors looking ahead to bellwether company earnings

* Merck up after FDA review, strategic options plans

* Suntory Holdings to acquire Beam for $83.50 per share

* Lululemon, Sodastream, Express fall after outlooks

* Indexes: Dow down 0.1 pct, S&P down 0.1 pct, Nasdaq flat

By Ryan Vlastelica

NEW YORK, Jan 13 (Reuters) - U.S. stocks dipped modestly on Monday as investors awaited an onslaught of corporate results to gauge how companies are faring amid mixed signs on economic growth.

While early reads on the season have been strong, market participants are looking for further justification that stocks are fairly valued with indexes near all-time highs.

Following a jump of almost 30 percent last year, the S&P 500 is above the mean forward price-to-earnings ratio and is at its highest level in nearly seven years. While earnings are seen rising 7.3 percent in the fourth quarter, according to Thomson Reuters data, the 9.8 ratio of negative guidance to positive outlooks is at a record.

"People are sitting on their hands, waiting for major results to figure out how strong this season may be," said Douglas DePietro, managing director at Evercore Partners in New York.

DePietro was looking forward to results from JPMorgan Chase & Co and Wells Fargo & Co, both of which are slated to report on Tuesday. General Electric Co, Goldman Sachs and Intel Corp are also among the names reporting this week.

Equity gains have largely come on accommodative monetary policies by the Federal Reserve, although not all economic indicators enjoyed a similar boost. The December payroll report, released on Friday, came in much lower than expected.

The Dow Jones industrial average was down 25.30 points, or 0.15 percent, at 16,411.75. The Standard & Poor's 500 Index was down 1.93 points, or 0.10 percent, at 1,840.44. The Nasdaq Composite Index was up 1.73 points, or 0.04 percent, at 4,176.39.

Losses were limited in the Dow and S&P by Merck & Co , which rose 2.9 percent to $51.33 after a preliminary review by the U.S. Food and Drug Administration said the company's experimental blood clot-preventing drug vorapaxar should be approved.

In addition, the drugmaker said it is pursuing strategic options for its animal health and consumer businesses and expects to complete any action it takes this year.

Equities have started 2014 on a lackluster note, dipping 0.3 percent through the first seven trading sessions as market participants tried to gauge the pace of the winding down of market-friendly economic stimulus by the Federal Reserve.

In merger news, Beam Inc agreed to be acquired by Suntory Holdings Limited for $16 billion, including debt, while British engineering firm Amec said it had provisionally agreed to buy Foster Wheeler in a cash and share deal that values the company at $3.13 billion.

Shares of Beam jumped 24 percent to $83.16 while Foster rose 1.3 percent to $31.86.

"Merger and acquisition activity continues to be an underlying bullish sentiment for the market," said DePietro. "It's one of the most positive things reflecting on the market."

A string of companies tumbled after forecasting earnings.

Lululemon Athletica Inc fell 16 percent to $50.07 after the yoga wear retailer cut its forecast for the fourth-quarter due to weak sales in January.

Sodastream International slumped 21.2 percent to $39.30 after the home beverage system maker lowered its earnings outlook for 2013. Apparel retailer Express Inc lost 3.2 percent to $18.41 after it lowered its fourth-quarter outlook.

But Wendy's outlook was a bright spot, sending shares up 8.3 percent to $9.14 after the fast-food restaurant chain estimated adjusted quarterly earnings above analysts' expectations, as expenses fell due to franchising many company-owned outlets.