* Instability worries follow Greek election outcome
* Rock-Tenn and MeadWestvaco rally, set to merge
* D.R. Horton up after results, lifting homebuilders
* Indexes: Dow and S&P 500 flat, Nasdaq up 0.1 pct (Updates to mid-morning trading)
By Ryan Vlastelica
NEW YORK, Jan 26 (Reuters) - U.S. stocks were little changed on Monday after a decisive Greek election victory by the Syriza party spurred concern over fresh instability in the euro zone, even as the possibility of Greece leaving the bloc was considered remote.
The leftist Syriza party looked set to take on Greece's international lenders, with leader Alexis Tsipras pledging to end five years of austerity and renegotiate Greece's debt agreements. Investors were concerned that potential conflicts with other euro zone governments could put more strain on the currency bloc.
While the United States has limited direct exposure to Greece's relatively small economy, extended volatility in the region could hurt multinational companies. If the euro continues to weaken against the dollar, that could be a headwind for earnings.
"The ongoing display of angst is that Greece removes itself from the euro-zone. It's the unknown about things breaking up," said Frank Davis, director of sales and trading at LEK Securities in New York. "We consider that a remote possibility, but it makes sense for us to take a pause and reassess our fundamentals."
The German government said a third debt restructuring was out of the question for Greece, though it opened the door to a possible extension of the country's current bailout program.
In deal news, Rock-Tenn Co and MeadWestvaco Corp said they would combine to form a packaging company worth $16 billion, with MeadWestvaco shareholders owning a majority stake. Rock-Tenn rose 9.4 percent to $68.93 while MeadWestvaco rose 18 percent to $53.02 as the S&P 500's biggest gainer.
D.R. Horton Inc climbed 6.8 percent to $24.70 after the homebuilder's revenue growth beat expectations, boosted by home deliveries. Homebuilders rose 1.5 percent.
With 19 percent of S&P 500 companies having reported earnings, 71.6 percent have topped expectations, while 54.7 percent have beaten revenue forecasts, according to Thomson Reuters data. That compares with the long-term average of 63 percent for earnings and 61 percent for revenue.
At 10:58 a.m. (1558 GMT) the Dow Jones industrial average rose 0.77 points, or 0 percent, to 17,673.37, the S&P 500 gained 0.22 points, or 0.01 percent, to 2,052.04 and the Nasdaq Composite added 2.82 points, or 0.06 percent, to 4,760.70.
Ocwen Financial Corp jumped 13 percent to $7.19 after the company paid $2.5 million in penalties to the California Department of Business Oversight, which had threatened to suspend Ocwen's license to operate in the state. About 19 million shares exchanged hands, making the stock one of the New York Stock Exchange's most active.
Advancing issues outnumbered declining ones on the NYSE by 1,668 to 1,208, for a 1.38-to-1 ratio; on the Nasdaq, 1,479 issues rose and 1,061 fell, for a 1.39-to-1 ratio favoring advancers.
The S&P 500 was posting 17 new 52-week highs and 7 new lows; the Nasdaq Composite was recording 48 new highs and 31 new lows. (Editing by Bernadette Baum and Nick Zieminski)