1:00AM NY, 5:00 PM Frankfurt European stocks hit multi-year highs in strong financial shares.
European stock markets hit new multi-year highs on Monday, benefiting from strength in the banking sector, generated by deal talk involving Dutch bank ABN Amro. The Dutch bank giant surged 5.7% after it said it will exceed its 2007 earnings target. The company also stated that it received a letter of interest from Royal Bank of Scotland, Banco Santander Central Hispano and Fortis. Analysts speculated that the consortium will outbid ABN’s other potential bid suitor, U.K. banking group Barclays. Barclays shares rose 1.7%, while Royal Bank of Scotland shares rose 2.4%, Fortis shares declined 1.2% and Santander shares rose 1%. On the earnings front, shares of Royal Philips Electronics rose 5.5% after its quarterly profit beat estimates. The German DAX 30 index climbed 1.8% at 7,338.06, the French CAC-40, advanced 1.3% at 5,861.97, and the U.K.''s FTSE 100 rose 0.8% at 6,516.20.


11:30AM U.S. market averages rallied on $25 billion buyout deal.
U.S. market averages moved sharply higher on Monday morning, building on last-week gains. The sentiment was driven by Citigroup, which rose 2.8% on higher-than-expected earnings and a $25 billion buyout deal for Sallie Mae, sending its shares up 18%. Slightly stronger-than-expected rise in March retail sales helped push the Standard & Poor''s 500 index to 6-1/2-year highs. A notable decline by the price of oil also contributed to the upward move, with crude futures down 74 cents at $62.89 a barrel.

By sector, banks, broker/dealers and broad financials led gainers. Financial stocks showed significant strength, with Citigroup (C: chart) helping to lead the sector higher. Wachovia (WB: chart) was another notable advancer, rising 2% on better-than-expected earnings. Strength also emerged in the retail sector, as a report from the Commerce Department showed that retail sales rose 0.7% in March, exceeding economist estimates. The oil price decrease contributed to considerable strength in the oil-sensitive airline sector, as well as a notable decline for oil and gas stocks. Tech shares were helped by Google (GOOG: chart), which rose 2% after it said it expanded its agreement with Clear Channel Communications (CCU: chart) to sell ads on more than 675 radio stations. Amazon.com Inc. (AMZN: chart) rose 5.8% after Deutsche Bank raised its rating on the Internet retailer''s shares.

In deal news, an investor group led by J.C. Flowers & Co. reached a deal to buy Sallie Mae (SLM: chart) in a deal valued at $25 billion, sending its shares up 18%. Quest Diagnostics Inc. (DGX: chart) fell 4.5% amid news that it is buying closely held AmeriPath Inc. The Dow Jones industrial average was up 87.20 points, or 0.69%, at 12,699.33. The S&P 500 was up 11.78 points, or 0.81%, at 1,464.63. The Nasdaq Composite Index was up 19.68 points, or 0.79%, at 2,511.62.


9:45AM U.S. markets opened higher on strong earnings from Citigroup and Wachovia.
U.S. market posted gains at opening, boosted by $25 billion buyout of student-loan firm Sallie Mae, as well as stronger-than-expected earnings from Citigroup, Wachovia, Eli Lilly and Mattel. Citigroup (C: chart) posted Q1 profit drop of 11%, due to a big charge related to its restructuring plan. However, excluding it, the profit exceeded estimates, thanks to an increase in revenue. The stock rose 3.2% helping the blue chips and other financial stocks. Dow components American Express Co. (AXP: chart) and JP Morgan Chase & Co. (JPM: chart) rose 1.5% and 2.3%, respectively. Wachovia Corp. (WB: chart) gained 1.8% after the bank giant reported earnings rise of $1.20 a share, up from $1.09 a share a year ago.

Strong earnings results were also released by toy maker Mattel (MAT: chart), which said Q1 earnings dropped 60% to 3 cents a share from profit of 8 cents a year ago but beat analyst expectation of a 5-cent loss. Company''s shares gained 1.1%. Pharmaceutical company Eli Lilly (LLY: chart) gained 1.4% after reporting a drop in Q1 profit amid acquisition-related charges and costs from a settlement of product-liability litigation. However, the company posted 4% sales increase. Among companies driven by analyst comments, Amgen (AMGN: chart) rose 1.6% after it was upgraded to overweight from equal weight at Morgan Stanley.

On the economic news front, the Commerce Department reported that retail sales rose 0.7% in March, led by higher spending on clothing, gas and building materials. Retail sales were slightly stronger than the 0.6% expected by economists. According to another report, business-inventories for February gained 0.3%, in line with expectations. In midmorning trading, the Dow Jones industrial average rose 66.39, or 0.53%, to 12,678.52. The Standard & Poor''s 500 index rose 10.27, or 0.71%, to 1,463.12, and the Nasdaq composite index rose 17.72, or 0.71%, to 2,509.66. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.74% from 4.77% late Friday.


9:30AM The FTSE 100 rallies Monday on strong financial and metal stocks.
The UK market was higher by mid-day on Monday. The benchmark index was 33.3 points higher at 6,495.9.

Advancers

Barclays rose 2.2% as the end of an exclusive 30-day negotiating period with Dutch bank ABN Amro drew nearer. The UK bank is facing competition from an RBS-led consortium, which is proposing a three-way break-up of the Dutch bank.

The news buoyed the rest of the financials sector, with Lloyds TSB up 1.5%, Bradford & Bingley 1.7% higher and Old Mutual up 2.1%.

Miners gained as metal prices rose, with Antofagasta, up 0.7% Rio Tinto, 1% higher, BHP Billiton, gaining 1.3% and Vedanta Resources, adding 1.4%, among the best performers.

Decliners

HSBC was downbeat on the retailer sector, downgrading Kingfisher and Next from overweight to neutral.Their shares fell 0.3% and 0.6% respectively. The bank also reduced its price target on HMV, pulling the music and book retailer 2.2% lower.

Support services firm Carter & Carter dipped 2.2%. The company lifted interim profits by 25% to 3.8 million pounds adding that it is confident of meeting its expectations for the remainder of the year. Revenue grew 64% to 62.2million pounds.

The worst performing stock was Fiberweb, which tumbled 14.2%, after it warned that current expectations of a significant increase in underlying operating profit and earnings before restructuring in American Industrial business in 2007 will not be attained.