NEW YORK (AP) – Stocks were narrowly mixed Tuesday as concerns about a market correction offset investor optimism that acquisition activity is on pace to set a record this year.

The $45 billion buyout of electric utility TXU Corp. injected confidence into the market that merger and acquisition activity could surpass last year’s record $4 trillion level. The deal, led by a consortium of buyout shops that include Kohlberg Kravis Roberts & Co. and Texas Pacific Group, would go down as the largest leveraged buyout in U.S. history.

Other deals announced before the opening bell included Station Casinos Inc., which agreed to be bought by a private equity firm started by the company’s founding family. Temple-Inland Inc., a conglomerate that offers everything from packaging material to financial services, announced it plans to separate itself into three standalone public companies.

However, stocks were unable to sustain gains as there continued to be concern major indexes are in need of a correction. The Dow Jones industrials, after hitting a peak last week, fell for three straight sessions in their worst weekly decline since August.

“Despite the buyout news, we’re seeing the broader market a little concerned that we’ve had such strength without a correction,” said Peter Dunay, an investment strategist with New York-based Leeb Capital Management. “We maybe be in a period where the market wants to step back for a bit.”

In midday trading, the Dow fell 3.37, or 0.03 percent, to 12,653.72. The index has had 31 record closes since the beginning of October, and is up about 8 percent in that time.

Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 0.96, or 0.07 percent, at 1,452.15, and the Nasdaq composite index fell 7.60, or 0.30 percent, to 2,507.50. The Nasdaq was the only index that finished last week in positive territory, while the Dow and S&P dipped.

Bonds continued to rise from last week’s sell-off, with the yield on the benchmark 10-year Treasury note falling to 4.64 percent from 4.68 percent late Friday. Bonds had been weaker amid concerns that subprime lenders would be forced to take write-downs if consumers defaulted on mortgage payments.

The dollar was mixed against other major currencies, while gold prices rose.

Oil prices declined after spending most of the session in positive territory after a winter storm plowed across the United States, spurring expectations of strong demand for heating oil. A barrel of light sweet crude fell 18 cents to $60.96 on the New York Mercantile Exchange.

TXU rose $7.96, or 13.3 percent, to $67.98 after it agreed to be bought by private equity firms. Directors of the electric utility voted Sunday night to recommend that shareholders approve the sale, which values its stock at a 15 percent premium.

Meanwhile, Dow Chemical Co. spiked $2.77, or 6.4 percent, to $46.22 on speculation it could be the target of a leveraged buyout. London’s Sunday Express newspaper, in an unsourced report, said the chemical company might be given an offer of about $54 billion from buyout funds.

Station Casinos rose $3.35, or 4 percent, to $86.65 after it agreed to go private in a $5.4 billion deal, which represents an 8 percent premium over its closing price on Friday. The deal still allows Station to solicit acquisition proposals from third parties for 30 days.

Temple-Inland rose $7.22, or 13.1 percent, to $62.17 after it agreed to spin off its real estate and financial services arms, and sells its timberland business. The decision came days after activist shareholder Carl Icahn said he’d wage a proxy fight to seize control of the board.

Gilead Sciences Inc. rose 15 cents to $73.78 after the biopharmaceutical company said one of its drugs used to treat HIV works well with other therapies. Merck & Co. rose $1.65, or 3.8 percent, to $44.59 after the third-biggest U.S. maker of prescription drugs was upgraded to “Buy” from Citigroup.

Broadband communications maker Arris Group Inc. fell $1.79, or 12 percent, to $13.50. Ericsson AB, the world’s largest maker of wireless network gear, offered $1.4 billion to buy Norway’s Tandberg Television ASA, topping a bid by Arris.

Declining issues outpaced advancers by about 4 to 3 on the New York Stock Exchange, where volume came to 610.2 million shares.

The Russell 2000 index of smaller companies fell 2.71, or 0.33 percent, at 823.93.

Overseas, Japan’s Nikkei stock average closed up 0.15 percent. In afternoon trading, Britain’s FTSE 100 was up 0.52 percent, Germany’s DAX index added 0.50 percent, and France’s CAC-40 rose 0.81 percent.

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