SAN FRANCISCO — Google Inc.'s first-quarter profit rose 69 percent, maintaining the online search leader's penchant for blowing past analyst estimates.

The Mountain View-based company said Thursday that it earned $1 billion, or $3.18 cents per share, during the first three months of the year. That compared with net income of $592.3 million, or $1.95 per share, at the same time last year.

If not for expenses incurred for employee stock compensation, Google said it would have earned $3.68 per share. That figure topped the average estimate of $3.30 per share among analyst surveyed by Thomson Financial.

Quarterly revenue reached a new company high of $3.66 billion, a 63 percent increase from $2.25 billion last year.

After subtracting advertising commissions, Google's revenue totaled $2.53 billion. That amount was about $40 million above analyst estimates.

WALL STREET FLAT AS MARKETS CLOSE

NEW YORK — Wall Street was essentially flat Thursday after struggling to resume a modest upward trend while investors juggled upbeat economic data, divergent earnings reports and a pullback in Chinese stocks. The Dow Jones industrials edged higher to a record close for the second straight day.

While a mix of profit reports pushed and tugged at stocks Thursday, investors also watched markets abroad, where stocks fell following word that economic growth in China's first quarter jumped a higher-than-expected 11.1 percent and inflation increased at its fastest pace in more than two years. Chinese officials said they would take steps such as raising interest rates to curb growth.

Wall Street fell at the opening, then began to pare its losses after a research group said its barometer of future economic activity rose slightly in March, signaling modest growth in coming months. The Conference Board said its index of leading economic indicators rose 0.1 percent, as expected, to 137.4 in March.

MERRILL LYNCH FIRST QUARTER PROFIT JUMPS 30%

NEW YORK — Merrill Lynch & Co.'s first-quarter profit soared more than 30 percent, the nation's largest retail brokerage said Thursday, thanks to strong revenue from investments and takeover activity.

The results surpassed expectations, and cemented the notion that major financial companies have emerged unscathed from the stock market's turbulent first quarter, the cooling U.S. economy and troubles in subprime lending.

Excluding a charge incurred last year related to a change in accounting and retirement policies, Merrill Lynch's profit climbed 31 percent in the first quarter from the same period a year ago.

The New York-based company reported net income of $2.11 billion, or $2.26 per share, after preferred dividends. This was up from $432 million, or 44 cents per share, a year ago, when it recorded $1.2 billion in one-time compensation expenses. Excluding those expenses, the company earned $1.61 billion, or $1.65 per share, a year ago.

CHINA ECONOMY SIZZLES, GROWS 11.1 PERCENT

BEIJING — China's sizzling economy surged 11.1 percent in the first quarter, causing the country's Cabinet to declare Thursday it will take steps to keep the economy from overheating.

The pledge by the State Council came after the government announced that inflation rose to its highest level in more than two years.

Worries that Chinese authorities would raise interest rates to curb growth in Asia's second-biggest economy prompted regional stock markets to drop sharply. European markets also opened lower.

The consumer price index in March rose 3.3 percent, data showed, above the government's 3 percent target. And fixed-asset investment countrywide grew a robust 23.7 percent during March.

A statement posted on the council's Web site following a meeting chaired by Premier Wen Jiabao said the government will work to "reduce the country's large trade surplus, limit rapid growth in house prices and maintain basic price stability."

Asian markets fell ahead of the report's release in anticipation that the numbers would be stronger than expected and prompt Beijing to act to restrain growth in China, a major regional trading power.

MERCK & CO. REPORTS 12 PERCENT SURGE IN PROFITS

TRENTON, N.J. — Merck & Co. Inc. said Thursday its first-quarter profit jumped 12 percent, as the drugmaker posted sharply higher sales of its asthma and cholesterol drugs, plus one-time gains from product divestitures.

Meanwhile, the number of personal injury lawsuits in the massive litigation over the painkiller Vioxx, which Merck withdrew from the market in September 2004 due to increased risk of heart attack and stroke, declined slightly for the first time.

The Whitehouse Station, N.J.-based maker of Fosamax for osteoporosis and Singulair for asthma and allergies posted net income of $1.7 billion, or 78 cents per share, up from $1.52 billion, or 69 cents per share, in the first quarter of 2006.

Excluding a charge of 6 cents per share, or $186 million, for its ongoing global restructuring program, Merck said income would have been 84 cents per share. That matched the forecast of analysts surveyed by Thomson Financial, who had bumped up their estimates last Thursday when Merck raised its earnings forecast by 15 cents.

In the year-ago quarter, Merck took a charge of 9 cents per share, or $304 million, for the restructuring.

FIRST QUARTER PROFIT DOWN FOR ALTRIA

NEW YORK — Altria Group Inc., owner of the Philip Morris cigarette companies, said Thursday that first-quarter income fell by 21 percent as domestic cigarette sales dropped off more severely than expected.

Chief Financial Officer Dinyar S. Devitre also said Philip Morris International was ready to be spun off, if the board decided to do so. Analysts are predicting that Altria will split its domestic and international units later this year.

The company also raised its full-year earnings prediction.

Net income dropped to $2.75 billion, or $1.30 per share, from $3.48 billion, or $1.65 per share, in the same period last year.

Excluding costs from a spin off of Kraft Foods and other one-time items, Altria said earnings per share were up 5.1 percent to $1.03. On that basis, analysts polled by Thomson Financial expected Altria to report a profit of $1.05 per share for the quarter.

Revenue for the quarter grew to $17.56 billion, up 8.2 percent from $16.23 billion a year ago.

ONLY SLIGHT EXPANSION PREDICTED FOR U.S. ECONOMY

NEW YORK — The U.S. economy should expand only slightly in coming months as it continues to lose steam, a gauge of future growth showed Thursday.

But a resilient labor market indicates the economy remains generally healthy, economists said.

The Conference Board said its index of leading economic indicators climbed a tepid 0.1 percent to 137.4 in March, as expected. The index is designed to forecast economic activity over the next three to six months.

The latest reading reverses two consecutive months of declines. Despite the increase, the index is still below its most recent high of 138.6 in January 2006 and the year-ago level of 138.5 in March 2006.

The reading tracks 10 economic indicators. Six of those readings were positive in March: initial unemployment claims, weekly manufacturing hours, real money supply, vendor performance, building permits, and manufacturers' new orders.

The negative contributors were stock prices, consumer expectations, interest rate spread and manufacturers' new orders.

OIL PRICES FALL OVER INVENTORY CONCERNS

NEW YORK — Oil prices tumbled Thursday as traders focused on inventory buildups at a key Oklahoma oil terminal and on a general sell-off in May futures contracts, which expire Friday.

Contributing to the decline was a consultant's report that Iraq oil reserves could be much larger than initially expected, and reports that China may take more serious steps to slow its economic growth.

But forefront in traders minds were inventory concerns. A February fire that shuttered Valero's McKee refinery in Texas has caused crude inventories to build up at an oil terminal in Cushing, Okla. The refinery, which has come partially back online this week, had caused a bottleneck, said John Kingston, director of oil at Platts, a division of McGraw-Hill Cos.