Dow, Nasdaq advance in afternoon trading

Dow, Nasdaq advance in afternoon trading

	Published : Mon, 29 Jan 2007 23:15 By : Agencies Print this Story

NEW YORK (AFX) - Stocks rose moderately Monday as another round of buyout news renewed investors' optimism about the economic and business climate in the months ahead. Investors also were looking to place bets a day ahead of the Federal Reserve's first meeting of the year.

After a volatile week in which stocks lost ground, merger and acquisition news helped buoy sentiment. Merrill Lynch & Co. agreed to acquire wealth manager First Republic Bank for $1.8 billion in cash and stock and Citigroup Inc. struck an agreement to buy British insurer Prudential PLC's Egg Banking PLC online bank for 575 million pounds, or about $1.13 billion.

Many on Wall Street were girding for a busy week of economic and earnings news as they try to determine whether an indecisive market can resume its advance from the second half of 2006. A two-day Fed meeting begins Tuesday, after which investors will receive the central bank's latest thoughts on the economy and interest rates, and a torrent of fourth-quarter earnings reports is due to arrive. The Fed has left short-term interest rates unchanged at its last four meetings.

Denis Amato, chief investment officer at Ancora Advisors, said that while the buyout news Monday could give stocks a short-term boost, he believes investors haven't reconciled their hopes with reality as far as the Fed stands. 'I think (the market) still needs to come to terms with the fact the Fed is probably not going to drop interest rates anytime soon.'

In early afternoon trading, the Dow Jones industrial average was up 23.31, or 0.19 percent, at 12,510.33.

Broader stock indicators also rose. The Standard & Poor's 500 index was up 0.28, or 0.02 percent, at 1,422.46, and the Nasdaq composite index was up 1.38, or 0.06 percent, at 2,436.87. Bonds were little changed ahead of the Fed meeting; the yield on the benchmark 10-year Treasury note was flat at 4.89 percent from late Friday. The dollar was mixed against other major currencies, while gold prices fell.

Oil was down 88 cents at $54.54 a barrel on the New York Mercantile Exchange.

Leading the buyout news was Merrill Lynch's plan to acquire First Republic Bank. As is typical for the company doing the acquiring, Merrill was down $1.18 at $93.37, while First Republic jumped $15.35, or 40 percent, to $53.65. Citigroup, meanwhile, was off 47 cents at $54.20.

Drug developer MDS Inc. agreed to acquire Molecular Devices Corp., which makes bioanalytical measurement systems, for $615 million. MDS rose 23 cents to $17.33, while Molecular Devices jumped $11.24, or 47 percent, to $35.12.

Bowater Inc. and Canada's Abitibi-Consolidated Inc. agreed to an all-stock deal in which Bowater shareholders would hold a 52 percent stake and make the combined company the third-largest publicly traded paper and forest products company in North America. Bowater rose $4.85, or 22 percent to $27, while Abitibi jumped 63 cents, or 24 percent, to $3.27.

'I think it's indicative that there is still a lot of liquidity sloshing around. The capitalization rates that seem to be implied aren't really great so it's kind of amazing that they are able to get the money to do it,' Amato said, question whether a bump in the economy could cause such deals to dry up as liquidity shrinks.

In other corporate news, earnings from Verizon Communications Inc. met with a tepid response from investors although the telecommunication company's per-share earnings came in a penny ahead of Wall Street's forecast. Verizon was up 7 cents at $37.90 after reporting its fourth-quarter profit fell amid taxes and costs related to a spinoff.

Tyson Foods Inc. rose 62 cents, or 3.7 percent, to $17.31 after the company's fiscal first-quarter profit jumped 46 percent in the first quarter as the meat producer saw increased chicken sales and lower costs.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 820.3 million shares.

The Russell 2000 index of smaller companies was up 6.30, or 0.80 percent, at 794.45.

Overseas, Japan's Nikkei stock average closed up 0.28 percent. Britain's FTSE 100 ended up 0.19 percent, Germany's DAX index finished up 0.53 percent, and France's CAC-40 was up 0.67 percent.