US STOCKS-S&P 500, Dow fall as energy sinks; Nasdaq up after deal news

* Initial claims climb in latest week

* CPI (Other OTC: CPICQ - news) posts biggest drop since 2008

* Durable goods orders top expectations

* Salesforce.com climbs after results, outlook

* Indexes: Dow off 0.2 pct, S&P off 0.3 pt, Nasdaq up 0.1 pct (Updates to afternoon trading)

By Caroline Valetkevitch

NEW YORK, Feb 26 (Reuters) - The Dow and S&P 500 slipped in afternoon trading on Thursday as energy shares tumbled with oil prices, while the Nasdaq advanced after deal news in the technology sector.

Energy shares led declines in the S&P 500 and Dow, with the S&P 500 energy index dropping 2.3 percent as U.S. crude oil futures fell 5.5 percent to settle at $48.17, pressured by rising inventories in the United States.

Avago Technologies jumped 13.2 percent to $129.47 as the best performer on both the S&P 500 and Nasdaq 100 index after the company reached a deal to acquire Emulex for $8 per share. Emulex shares surged 25.4 percent to $7.97.

Apple (NasdaqGS: AAPL - news) shares also edged higher and were last up 0.6 percent at $129.50. Apple sent out invitations for a March 9 event, about one month before the much-anticipated launch of the new Apple Watch.

After a sluggish start to the year, stocks have rebounded sharply in February. Both the Dow and S&P 500 are on track for their best monthly performance since October 2011, while the Nasdaq is on pace for its best month since January 2012.

"It's one of the strongest months in years for the S&P 500, the Nasdaq just a hair away from all-time highs, and we came up very far, very fast. But we've had a big move ... and you have to expect some profit-taking," said Adam Sarhan, chief executive of Sarhan Capital in New York.

At 2:39 p.m., the Dow Jones industrial average fell 34.26 points, or 0.19 percent, to 18,190.31, the S&P 500 lost 7.11 points, or 0.34 percent, to 2,106.75 and the Nasdaq Composite added 4.46 points, or 0.09 percent, to 4,971.59.

The Nasdaq's all-time intraday high of 5,132.52 was hit in March 2000.

Economic data was mixed. January U.S. consumer prices had the biggest drop since 2008 as gasoline prices tumbled, while weekly jobless claims climbed last week and durable goods orders rose last month. The deflation data could provide a cautious Federal Reserve with leeway to keep interest rates low for a bit longer.

Salesforce.com shares climbed 10 percent to $69.14 after the cloud software company reported quarterly earnings and raised its full-year revenue forecast.

Transocean (LSE: 0QOW.L - news) shares was down 1.4 percent to $15.82 after quarterly results. Among other energy-related shares, Exxon Mobil (Swiss: XOM.SW - news) was down 1.5 percent at $88.28.

Declining issues outnumbered advancing ones on the NYSE by 1,721 to 1,267, for a 1.36-to-1 ratio; on the Nasdaq, 1,404 issues rose and 1,267 fell, for a 1.11-to-1 ratio favoring advancers.

The S&P 500 was posting 40 new 52-week highs and three new lows; the Nasdaq Composite was recording 117 new highs and 16 new lows. (Editing by Bernadette Baum and Nick Zieminski)