US STOCKS-Wall Street buoyed by earnings, deal talk

                                

                                
 * Wal-Mart, Home Depot profits top estimates
                                
 * Materials get boost from Potash bid
                                
 * Industrial production expands more than expected
                                
 * Dow up 1.6 pct, S&P up 1.8 pct, Nasdaq up 1.8 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates to late afternoon, changes byline)
                                
 By Angela Moon
                                
 NEW YORK, Aug 17 (Reuters) - U.S. stocks rose on Tuesday as
earnings from major retailers and a $39 billion takeover bid
in the agriculture sector restored optimism about the profit
outlook.
                                
 Growth prospects also improved with a jump in U.S.
industrial production, which helped counter some recent signs
of a slowdown that had been driving investors from the equities
market.
                                
 The materials sector handily outperformed the broad market
after BHP Billiton Ltd <BHP.AX><BLT.L> made an unsolicited $39
billion takeover bid for Potash Corp of Saskatchewan Inc
<POT.TO><POT.N>, which was rejected by the world's largest
fertilizer maker as "grossly inadequate." For details, see
[ID:nSGE67G0DT].
                                
 Potash's U.S.-traded stock surged 27.5 percent to $142.96.
Fertilizer producer CF Industries <CF.N> jumped 5.2 percent to
$88.95 after Goldman Sachs upgraded the stock, while the
materials sector <.GSPM> gained 2.9 percent.
                                
 The Dow was buoyed by gains in Wal-Mart Stores Inc <WMT.N>
and Home Depot Inc <HD.N> after both companies reported profit
that topped expectations. Wal-Mart was up 1.9 percent at $51.38
and Home Depot gained 4.8 percent to $28.69. [ID:nN17234410]
[ID:nN17114618]
                                
 "The deal talk is a big catalyst for today's rally. It
validates that there is a greater confidence in the outlook for
materials companies," said John Praveen, chief investment
strategist at Prudential International Investments Advisers LLC
in New Jersey.
                                
 The Dow Jones industrial average <.DJI> was up 169.16
points, or 1.64 percent, at 10,471.17. The Standard & Poor's
500 Index <.SPX> was up 19.25 points, or 1.78 percent, at
1,098.63. The Nasdaq Composite Index <.IXIC> was up 39.69
points, or 1.82 percent, at 2,221.56.
                                
 Data showing sturdy growth in industrial output, implying
the economy has enough strength to keep growing, gave a boost
to basic materials shares and technology stocks.
                                
 Agriculture and fertilizer stocks led gains as midcap
Intrepid Potash <IPI.N> jumped 7.1 percent to $25.65.
[ID:nN17137167]
                                
 Heavy-equipment maker Caterpillar <CAT.N> was up 2.8
percent at $70.36, providing the Dow its second-biggest boost.
                                
 Investors had been shunning the stock market for most of
last week, preferring assets considered safe havens like the
U.S. dollar and bonds.
                                
 Other economic data was mixed, with housing starts rising
in July to a weaker level than expected. However, prices paid
at the farm and factory gate, excluding food and energy, rose
0.3 percent in July, easing investor worries about the threat
of deflation.
 (Reporting by Angela Moon, Editing by Kenneth Barry)