11:30AM Wall Street traded higher, boosted by merger activity. Dow rose 100 points.
U.S. stock averages traded sharply higher on Monday, with the Dow advancing by 100 points, lifted by overseas gains and a series of deal announcements including merger talk between two European banks. Dutch banking group ABN Amro (ABN: chart) jumped 9% amid reports that it is in merger talks with the U.K.'s Barclays which will make an announcement on Tuesday. The bid offer is likely to spark a bidding war with other European banks interested in buying ABN Amro. Again on the merger-and-acquisition front, Community Health Systems (CYH: chart), hospitals operator, agreed to acquire Triad Hospitals (TRI: chart) for $54 per share, or about $5.1 billion. Community Health fell 6.5%, while Triad rose 5%.

The blue-chip average was sent notably higher by strong gains for Caterpillar Inc. (CAT: chart), up 2.3%, McDonald's Corp. (MCD: chart), up 1.4% and United Technologies (UTX: chart), up 1%.Financial shares on the Dow also contributed to the upward move, with American Express Co. (AXP: chart), up 0.5%, Citigroup Inc. (C: chart), gaining 1% and JP Morgan Chase & Co. (JPM: chart), rising 1.6%. Again on the Dow, Walt-Disney Co. (DIS: chart) rose 1.3%. The company announced on Friday a probe into its unit Pixar revealed that options had been backdated but that no one from the firm had engaged in any intentional or deliberate misconduct.

In world news, Brazil's state-run oil company Petrobras and two partners agreed to buy Ipiranga, the No. 2 fuel distributor and refiner, in a $4 billion cash and stock deal. In late morning trading, the Dow rose 120.33, or 0.99%, to 12,230.74. The Standard & Poor's 500 index rose 15.61, or 1.13%, to 1,402.56, and the Nasdaq composite index advanced 24.53, or 1.03%, to 2,397.19. Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.56% from 4.55% late Friday.


10:30AM London benchmark index is higher Monday on M&A activity.
The UK market was higher on Monday. The FTSE 100 was up 28 points at 6,158.6.

Advancers

ABN gained 7.5% while Barclays added 0.4% on reports that the UK group was interested in making a bid for the Dutch bank. First Choice Holidays rose 7.8% after the tour operator announced plans to merge with TUI of Germany. The combined group, which will be 51% owned by TUI shareholders and will be listed on the London Stock Exchange.

Laird Group rose 9.5% after it pledged to return 100 million pounds to investors after the 242.5 million pound sale of its security systems division to Lupus Capital. It also reported a 94% rise in full-year profits.

Mid-cap goods retailer Mothercare was 1% stronger as it announced plans to buy Chelsea Stores, parent company of toy retailer Early Learning Centre, for 85 million. Mitchells & Butlers gained 4.2% on reports that financier Robert Tchenguiz was ready to bid for the pub and bar company. Wolseley rose 3.6% higher after it stood by its double-digit growth targets despite reporting lower interim profits

Decliners

AstraZeneca leads the decliners, down 2.1%, on more research disappointment. Heart drug AGI-1067 has failed its final phase III trial according to US biotech partner AtheroGenics. Imperial Tobacco lost 1.5% on speculation that the makers of Lambert & Butler cigarettes was ready to improve its offer for Altadis after the Spanish group rejected a 45 euro a share offer as too low. HMV shares slumped 3.9% as buyers continued to shun the music and books group.


9:45AM Wall Street rallied at opening, boosted by deal announcements.
U.S. stocks rallied at opening Monday, boosted by gains in overseas markets and several merger deals totaling about $10 billion. ServiceMaster (SVM: chart) surged over 12% after it announced that it will be bought by an investment group for $5.5 billion, including $1.02 billion in debt. Hercules Offshore (HERO: chart) dropped nearly 10% after it said it agreed to buy Todco (THE: chart) for $2.3 billion in cash and stock. Shares of Torco soared 17%. Quanta Services (PWR: chart), provider of contracting services to utilities and telecommunications companies, gained 2.5%, following an agreement to acquire InfraSource Services (IFS: chart) for $1.26 billion in stock.

Dutch banking group ABN Amro (ABN: chart) was in the spotlight on merger speculation. The stock jumped 9% amid reports that it is in merger talks with the U.K.'s Barclays (BCS: chart) which will make an announcement before the London exchange opens on Tuesday. The bid offer is likely to spark a bidding war with other European banks interested in either merging with ABN Amro or acquiring certain of its divisions.

Biotech and pharma stocks gained in early trading as shares of Atherogenics (AGEN: chart) plunged almost 60% on news that its cardiovascular drug candidate AGI-1067 had failed a Phase III clinical trial. Technology stocks also posted strength, with shares of software makers Oracle Corp. (ORCL: chart) and Adobe Systems Inc. (ADBE: chart) each rising nearly 2% ahead of quarterly earnings releases on Tuesday. Shares of bellwethers International Business Machines Corp. (IBM: chart), Hewlett-Packard (HPQ: chart) and Apple (AAPL: chart) also advanced.

Shares of large Internet companies advanced. Yahoo Inc. (YHOO: chart) and Amazon.com Inc. (AMZN: chart) rose nearly 1%, while Google Inc. (GOOG: chart) inched up on reports it may be developing a software system for mobile phones. In the first hour of trading, the Dow Jones industrial average rose 79.87, or 0.66%, to 12,190.28. Caterpillar (CAT: chart) and United Technologies (UTX: chart) were among the leading gainers on the blue-chip average, rising 1.2% each. The Standard & Poor's 500 index rose 9.97, or 0.72%, to 1,396.92, and the Nasdaq composite index rose 15.58, or 0.66%, to 2,388.24. Bonds fell as stocks made gains. The yield on the benchmark 10-year Treasury note rose to 4.57% from 4.55% late Friday.


9:00AM U.S. stock futures pointed to a positive opening.
U.S. stock futures pointed to a higher opening Monday, following a positive start for both European and Asian markets. Investors were awaiting a report on home sales and manufacturing in the Midwest, as well as the Federal Reserve's two-day meeting on interest rates, starting on Tuesday.

In pre-market highlights, Nortel Networks (NT: chart) dropped 2.7% after forecasting flat revenue, reflecting a decrease in revenues as a result of its sale of its third-generation UMTS radio-access business to Alcatel-Lucent. On the merger-and-acquisition front, ServiceMaster ((SVM), a provider of housecleaning, landscaping, and pest-control services, soared 13% in the pre-open after agreeing to be bought by a private-equity consortium for about $5.5 billion, including about $1.02 billion in debt. In other deal news, Hercules Offshore (HERO: chart) fell 3.9% after it agreed to buy Todco in a deal worth $2.3 billion in cash and stock. Todco shareholders will receive 0.979 shares of Hercules Offshore and $16 in cash for each share of Todco common stock outstanding.

In broker news, J.P. Morgan upgraded drugstore chain Walgreen Co. (WAG: chart) to overweight from neutral, sending its shares up. DaimlerChryasler (DCX: chart) was upgraded to neutral from sell at Goldman Sachs, citing management's plans to consider all options for the future of the Chrysler unit. S&P 500 futures added 7.30 points at 1,406.30 and Nasdaq 100 futures climbed 9.25 points to 1,773.25. Dow futures were up 49 points at 12,260.