* M&A activity supports global shares
* Wall Street edges down as S&P hits resistance
* Euro slips back after hitting multi-month highs
* Brent crude hits $120 a barrel on Middle East unrest
(Rewrites, updates prices, adds details, quotes)
By Leah Schnurr
NEW YORK, April 4 (Reuters) - Merger and acquisition
activity helped global equities eke out mild gains on Monday,
while oil rose to 2-1/2-year highs on worries geopolitical
risks will hit supply.
The M&A cheer did little for Wall Street with the broad S&P
500 <.SPX> little changed as it encountered levels where
selling has clustered in recent sessions.
Expectations of higher euro zone interest rates took the
euro briefly to an 11-month high against Japan's yen, but the
currency eased back with expectations of an increase already
priced in.
Brent crude oil prices rose above $120 a barrel to the
highest level since before the collapse of Lehman Brothers and
the global financial crisis in September 2008. U.S. crude was
choppy after rising to $108.78, the highest intraday price
since September 2008.
Libya's continuing conflict and unrest in Yemen could pose
threats to supply in the Middle East, while investors expect
demand for oil could grow on signs of improvement in the U.S.
economy.
"Brent is up on Libya, Yemen unrest and the Nigerian
election," said Phil Flynn, analyst at PFGBest Research in
Chicago.
"U.S. crude is hesitant because there is still worry that
the Federal Reserve might be nearing a rate hike or tighter
policy, which would lower liquidity and demand and strengthen
the dollar," he added.
World stocks as measured by MSCI <.MIWD00000PUS> were up
0.2 percent, hovering around a one-month high and up nearly 5
percent for the year to date. European shares rose to a
three-week closing high.
"Positive sentiment is coming from mergers. We will see
more mergers and acquisitions and it is one of the reasons why
the stock market is still trading at these higher levels," a
London-based equity trader said.
In Europe Belgian chemicals group Solvay <SOLB.BR> launched
a bid for French rival Rhodia <RHA.PA> , driving up Rhodia's
shares 48 percent. []
Vodafone <VOD.L> gave back earlier gains to close lower
after selling its 44 percent stake in France's second biggest
telecom operator SFR to Vivendi <VIV.PA>. []
The FTSEurofirst 300 <> closed up 0.04 percent at
1,142,84 points, the highest close since March 9. Japan's
Nikkei <> also closed up 0.1 percent.
On Wall Street, Pfizer Inc <PFE.N> rose 0.5 percent to
$20.48 after the drugmaker agreed to sell its Capsugel unit,
the world's largest maker of hard capsules, to private equity
firm KKR & Co <KKR.N> for nearly $2.4 billion. For details, see
[]
But the S&P was slightly lower in the early afternoon,
hovering just under 1,333, a level that it has been unable to
close above since mid-February.
The S&P recorded its best two-week period since December on
Friday and the Dow industrials <> hit its highest intraday
level since June 2008.
"If we make a successful break from here, I think you've
got the 1,400 range and I think that's probably likely during
the final seasonally favorable push," said Bruce Zaro, chief
technical strategist at Delta Global Asset Management in
Boston.
The Dow Jones industrial average <> dipped 2.04 points,
or 0.02 percent, to 12,374.68. The Standard & Poor's 500 Index
<.SPX> slipped 3.04 points, or 0.23 percent, to 1,329.37. The
Nasdaq Composite Index <> was off 10.40 points, or 0.37
percent, to 2,779.20.
RATES DRIVE EURO
Economic improvement has cemented expectations that the ECB
will raise interest rates Thursday and led to speculation the
U.S. Federal Reserve may be getting closer to withdrawing
exceptional liquidity. []
A top Federal Reserve official said on Monday that U.S.
inflation is likely to remain low for now, but policymakers
will keep a close eye on potentially self-fulfilling consumer
expectations for higher prices. []
Reflecting expectations of differing rate paths, the euro
hit an 11-month high against the yen and touched a five-month
peak against the dollar. The euro later slipped back.
The euro briefly popped above 120 yen <EURJPY=R> for the
first time since May 2010 and was later at 119.50 yen. It hit a
five-month high against the dollar of $1.4269 and was later at
$1.4223 <EUR=>.
In commodities, ICE Brent <LCOc1> was up $1.50 at $120.20 a
barrel. U.S. crude <CLc1> rose 16 cents to $108.08 a barrel.
(Reporting by Leah Schnurr; Additional reporting by Edward
Krudy and Robert Gibbons in New York, Atul Prakash in London;
Editing by Kenneth Barry)
