11:30AM U.S. market averages extended rally. The Dow hit a new high

U.S. market averages extended rally in late morning trade, with the Dow rising 1% to a record intraday high after retailers posted upbeat June sales figures and outlooks. American Eagle Outfitters (AEOS) rose 6% after the youth clothing retailer said its same-store sales jumped 8%. J.C. Penney (JCP) added 3% after it posted a narrower-than-expected drop in its June same-store sales and affirmed its Q2 profit forecast.

Deal talk including Rio Tinto's (RTP) $38.1 billion bid for Alcan (AL) also provided support. Dow component Alcoa (AA) climbed 7% on the Alcan acquisition news, helping to lead the blue chip index higher. Other metal stocks also contributed to the upward move. The gold and steel sectors showed significant strength. Energy stocks moved notably higher, benefiting from an increase by the price of oil to $73.32 a barrel.

Further in M&A action, Huntsman (HUN) agreed to be bought for $28 a share in cash, or $10.6 billion, by Hexion Specialty Chemicals Inc. Huntsman shares dropped 4%. In late morning trading, the Dow Jones industrial average rose 143.55, or 1.06%, to 13,721.42, after climbing to 13,724.11, an intraday record. The Standard & Poor's 500 index rose 12.35, or 0.81%, to 1,531.11.The Nasdaq composite index rose 18.81, or 0.71%, to 2,670.60.


9:45AM Wall Street opened higher, helped by better-than-expected same-store sales and merger news.

Wall Street rallied at opening Thursday, boosted by optimism about consumer spending after retailers released June sales reports. Wal-Mart (WMT) rose 2.5% on higher-than-expected same-store sales. Nordstrom (JWN) and Limited Brands (JWN) also posted same-store sales above the average forecast, sending their shares up 3% and 2%, respectively.

Among other retail companies, J.C. Penney (JCP) climbed 3.5% after it reported lower same-store sales in June, beating estimates. Costco (COST) said its same-store sales rose but came below analyst expectations. The stock added 0.2%. Macy''s (M) reported a bigger-than-anticipated decline of 2.7% in June same-store sales. The department store operator cut its Q2 earnings outlook. The stock dropped 3.6%.

A higher bid for aluminum maker Alcan (AL) also generated positive mood. Rio Tinto offered to buy Canadian aluminum company Alcan for $38.1 billion, topping a bid from Alcoa that was rejected in May. Alcan shares surged 9%, while Dow member Alcoa rose 6%. In another deal, Huntsman (HUN) agreed to be bought for $28 a share in cash, or $10.6 billion, by Hexion Specialty Chemicals Inc. Huntsman shares dropped 4%.

In the first minutes of trading, the Dow Jones industrial average rose 76.25, or 0.56%, to 13,654.12. The Standard & Poor''s 500 index rose 7.92, or 0.52%, to 1,526.68, while the Nasdaq composite index rose 13.23, or 0.50%, to 2,665.02.


9:30AM London is higher Thursday on a strong rally in the mining sector.

The benchmark index FTSE 100 in London is 0.45% higher by mid-day, at 6,645. Investors shrugged off subprime mortgage fears and focused on Rio Tinto and its bid to buy Alcan. Rio, the second-biggest mining company in the world, made a cash offer of $101 a share for Alcan, valuing the latter at $38.1 billion.

Advancers

Miners hogged the limelight with Rio Tinto’s offer, boosting mining stocks. Antofagasta firmed 2.4%, Vedanta Resources gained 3.9%, Kazakhmys was up by 2.0% and Xstrata rose 2.4%.

Man Group reported that sales in the three months to June 2007 were $3.8 billion, while funds under management rose from $61.7 billion at March to $67 billion at June. The stocks rose 1.7%.

Kingfisher added 1% as Morgan Stanley upped its recommendation on the home-improvement retailer from underweight to equal-weight.

Decliners

Whitbread suffered profit taking after the stock made strong gains in the session on Wednesday on the back of bid speculation. Today, though, bid talk waned and the group, which runs Premier Travel Inn hotels and Beefeater restaurants, shed 3.2%.

Royal Dutch Shell shed 1.1% after it was downgraded by UBS to neutral from buy. Credit-checking company Experian declined 1.3% after it revealed that some markets are challenging despite expecting organic sales to grow at a mid-to-high single digit rate for the year.