* U.S., European stocks rise on increased M&A activity
* Crude oil rises toward $67 a barrel on economic optimism
* Yen comes off 8-month high versus dollar; euro slips
* Longer-dated bonds rise on benign inflation outlook
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, Sept 28 (Reuters) - Global stocks and oil rose on
Monday as news of several billion-dollar takeover offers
boosted confidence in a global recovery and led investors to
wade back into riskier assets after last week's sell-off.
The U.S. dollar dropped for a third session versus the
Japanese currency, sliding below 89 yen at one point, after
comments by Japan's finance minister raised speculation the new
government was unlikely to intervene to weaken its currency.
Oil rose more than 1 percent toward $67 a barrel as equity
markets jumped and news emerged that Iran was test-firing
missiles. For details see: [].
U.S. stocks snapped a three-day losing streak and European
shares broke two days of losses on increased merger and
acquisition activity, which is considered bullish as it
suggests companies are optimistic about the economic outlook.
[] []
Abbott Laboratories <ABT.N> said it would buy the drug unit
of Solvay <SOLB.BR> in a 4.5 billion euros ($6.6 billion) deal,
and Xerox Corp <XRX.N>, in its biggest acquisition ever, plans
to buy Affiliated Computer Services Inc <ACS.N> for $6.4
billion in cash and stock. [] []
"It's always a positive sign when you see companies putting
money to work, whether they buy other companies, invest in new
plants, (or) buyback their own stock," said Tim Smalls, head of
U.S. stock trading at brokerage firm Execution LLC in
Greenwich, Connecticut.
The Dow Jones industrial average <> closed up 124.17
points, or 1.28 percent, at 9,789.36. The Standard & Poor's 500
Index <.SPX> gained 18.60 points, or 1.78 percent, at 1,062.98.
The Nasdaq Composite Index <> jumped 39.82 points, or 1.90
percent, at 2,130.74.
The yen later gave up most gains after Japanese Finance
Minister Hirohisa Fujii told Dow Jones newswires it was wrong
to see his comments as a license to push the yen higher.
"The comments by the finance minister seemed to be an open
door to people who were bullish on the yen," said David Watt,
senior currency strategist at RBC Capital Markets.
The dollar was up against a basket of major currencies,
with the U.S. Dollar Index <.DXY> up 0.23 percent at 76.988.
The euro <EUR=> slipped 0.57 percent at $1.4603. Against
the yen, the dollar <JPY=> fell 0.01 percent at 89.62.
Oil gained as M&A activity bodes well for the economy and
increased energy demand.
Iran test-fired a type of missile which defense analysts
said could hit Israel and U.S. bases in the Gulf region,
Iranian state television reported. []
U.S. crude <CLc1> rose to settle up 82 cents at $66.84 a
barrel, after earlier hitting an intraday high of $67.54.
London Brent <LCOc1> rose 43 cents to settle at $65.54.
U.S. 30-year Treasury bonds extended their gains, rallying
more than a point in price as investors remained heartened by
last week's assurances that the Federal Reserve will preempt
inflation before it takes off.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
9/32 in price to yield 3.29 percent. The 30-year U.S. Treasury
bond <US30YT=RR> rose 34/32 in price to yield 4.04 percent.
Bets that inflation will remain low, spurred by German
consumer price data and comments by the European Central Bank
president, helped longer-dated U.S. and euro zone government
debt to rise.
"There's no inflation, and people are catching on to that,"
said Glen Capelo, co-head of rates at BroadPoint Capital in New
York.
Germany's consumer price index fell a faster-than-expected
0.3 percent annually in September, while the ECB's Jean-Claude
Trichet said inflation is expected to remain subdued over the
medium term. [][]
The 10-year Bund yield <EU10YT=RR> was almost two basis
points higher at 3.254 percent in late trade, having hit a low
of 3.213 percent. Bond yields and prices move inversely.
Gold futures rose toward $1,000 an ounce as a wave of
economic optimism prompted investment inflows into asset
classes across the board, bolstering the status of gold as a
hedge against inflation. []
December gold futures <GCZ9> settled up $2.50 at $994.10 an
ounce in New York.
Copper steadied by the close, as a rally in equities helped
offset concerns about rising inventories, falling Chinese
imports and weak demand in western countries. []
Copper for December delivery <HGZ9> on the New York
Mercantile Exchange's COMEX division fell 1.35 cents to close
at $2.7270 a pound.
The Nikkei share average <> shed 2.5 percent to hit a
two-month low and briefly fell below the 10,000 line.
The MSCI benchmark of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> fell 1.3 percent, while the Thomson Reuters
index for regional shares <.TRXFLDAXPU> shed 1.4 percent.
(Reporting by Ellis Mnyandu, Wanfeng Zhou, Edward
McAllister and Richard Leong in New York; Dominic Lau and Ian
Chua in London; writing by Herb Lash; Editing by Andrew Hay)
