US STOCKS-Wall St gains on earnings, economy; Egypt fears ease

                                

                                
 * Merger activity, earnings, data offset Egypt worry
                                
 * Exxon Mobil rises after profit tops forecasts
                                
 * Dow up 0.6 pct, S&P up 0.8 pct, Nasdaq up 0.5 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to close)
                                
 By Edward Krudy
                                
 NEW YORK, Jan 31 (Reuters) - U.S. stocks rose on Monday on
strong earnings and signs of a strengthening economy, even as a
surge in the price of oil highlighted the potential for
increased political risk in the Middle East to upset markets.
                                
 Egyptian Vice President Omar Suleiman said on Monday that
President Hosni Mubarak has asked him to start a dialogue with
all political forces, while Egypt's armed forces pledged not to
fire on peaceful demonstrators. [ID:nLDE70U00B]
                                
 The latest news calmed markets after stocks suffered their
biggest fall in nearly six months on Friday. The improved
sentiment helped the Market Vectors Egypt Index ETF <EGPT.P>
rise 7.9 percent, indicating investors' appetite for risk in
the region had recovered somewhat.
                                
 "It's creating a great opportunity to step up and increase
exposure to emerging markets and other areas of the
international markets," said Robert Lutts, president and chief
investment officer at Cabot Money Management in Salem,
Massachusetts. "I'm optimistic that this will be resolved and
blow over."
                                
 Relief that the turmoil appeared not to be escalating
allowed investors to focus on data showing stronger U.S.
personal spending and regional manufacturing, while
better-than-expected earnings from Exxon Mobil Corp <XOM.N>
sent the company's shares up more than 2 percent.
                                
 The Dow Jones industrial average <.DJI> gained 68.23
points, or 0.58 percent, to 11,891.93. The Standard & Poor's
500 Index <.SPX> rose 9.78 points, or 0.77 percent, to
1,286.12. The Nasdaq Composite Index <.IXIC> added 13.19
points, or 0.49 percent, to 2,700.08.
                                
 However, the rise in the price of NYMEX crude oil futures
suggested ongoing concerns. Crude climbed over 3 percent to
$92.19 per barrel on Monday on worries the unrest in Egypt
could spread to oil-producing nations or disrupt the flow of
oil through the Suez Canal. The S&P energy index <.GSPE> jumped
2.6 percent, marking the day's biggest sector gain.
                                
 "The question is what country might be next," said Mark
Luschini, chief investment strategist at Janney Montgomery
Scott in Philadelphia. "The catalyst is inflation, jobs -- or
the lack thereof -- and suppressive government."
                                
 The CBOE VIX Volatility index <.VIX>, known as Wall
Street's fear gauge, dipped 2.5 percent to 19.55, after having
surged by 24 percent on Friday in the largest single-day
percentage gain since May.
                                
 On the economic front, the Commerce Department said U.S.
consumer spending rose in December for a sixth straight month,
while a separate report showed business activity in the U.S.
Midwest grew more than expected in January. [ID:nN28151915]
[ID:nN31176745]
                                
 The strengthening data lifted optimism ahead of Friday's
closely watched monthly non-farm payrolls report, expected to
show the U.S. economy added 145,000 jobs in January.
                                
 M&A activity also helped lift stocks. Massey Energy Co
<MEE.N> rose 9.8 percent to $62.86 after Alpha Natural
Resources <ANR.N> agreed to a $7.1 billion deal to create the
second largest U.S. coal miner by market value.
[ID:nN29144292]
                                
 In other M&A action, CNOOC Ltd <0883.HK> <CEO.N> will pay
$1.3 billion in its second shale deal with America's Chesapeake
Energy Corp <CHK.N>, the latest move by China's top offshore
oil producer in its aggressive drive for overseas acquisitions.
[ID:nN30170001]
                                
 Chesapeake advanced 8 percent to $29.53.
                                
 Exxon Mobil Corp <XOM.N> gained 2.1 percent to $80.68 after
the world's largest publicly traded oil company reported a 53
percent increase in quarterly profit. Its shares closed up at
$80.68 after earlier in the day hitting a two-year high of
$80.82. [ID:nN30169616]
                                
 Technology bellwether Intel Corp <INTC.O> closed flat at
$21.07 after cutting its first-quarter revenue forecast by $300
million due to costs for correcting a design flaw in one of its
chips. For details, see [ID:nN31219961]
                                
 Trading volume was 7.7 billion shares on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, down from
last year's estimated daily average of 8.47 billion shares.
                                
 Trading volume on Friday when stocks skidded on fears over
Egypt had hit the highest of the year.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
about 5 to 2 on Monday. On the Nasdaq, advancers beat decliners
by around 3 to 2.
  (Reporting by Edward Krudy; Additional reporting by Alina
Selyukh; Editing by Leslie Adler)