US STOCKS-Spurt of M&A buoys Wall St, but volume light

                                

                                
 * Xerox will buy ACS; Abbott to buy Solvay's drugs unit
                                
 * Cisco jumps on upgrade, other big-cap techs also advance
                                
 * DJIA flirting with best quarter since 1998
                                
 * Dow up 1.3 pct; S&P 500 up 1.8 pct; Nasdaq up 1.9 pct
                                
 * For up-to-the-minute market news, click [STXNEWS/US]
 (Adds new paragraphs with pharmaceuticals index's gains and
volume figures)
                                
 By Ellis Mnyandu
                                
 NEW YORK, Sept 28 (Reuters) - U.S. stocks rallied on
Monday, snapping a three-day losing streak, as a spurt of
corporate takeovers in the technology and health-care sectors
fueled optimism about share values.
                                
 Mergers and acquisitions are typically viewed as bullish as
it suggests companies are more optimistic about the business
outlook.
                                
 A number of deals were announced and investors bet more
could follow. Xerox Corp <XRX.N> agreed to buy Affiliated
Computer Services Inc <ACS.N> , and Abbott Laboratories <ABT.N>
said it would pay $6.6 billion for Solvay's <SOLB.BR> drug
unit.
                                
 "It's always a positive sign when you see companies putting
money to work, whether they buy other companies, invest in new
plants, (or) buy back their own stock," said Tim Smalls, head
of U.S. stock trading at brokerage firm Execution LLC in
Greenwich, Connecticut.
                                
 "With depressed stock prices, like we've had over the past
year and a half, a lot of companies will find it cheaper to buy
a company than to grow that same type of company organically.
It's a more effective way to put money to work sometimes."
                                
 The Dow Jones industrial average <.DJI> rose 124.17 points,
or 1.28 percent, to end at 9,789.36. The Standard & Poor's 500
Index <.SPX> gained 18.60 points, or 1.78 percent, to 1,062.98.
The Nasdaq Composite Index <.IXIC> shot up 39.82 points, or
1.90 percent, to 2,130.74.
                                
 With Monday's gains, the Dow Jones industrial average held
an advance of about 16 percent in the quarter so far, which
would make it the index's best such period since the fourth
quarter of 1998.
                                
 But the end of the third quarter on Wednesday may spur
volatility as fund managers engage in what is known as "window
dressing" -- when they sell laggards in favor of outperformers
to spruce up portfolios at quarter's end.
                                
 In the last three sessions, the S&P 500 had declined more
than 2 percent after rallying nearly 60 percent from the
12-year closing low of early March.
                                
 MERGER MONDAY
                                
 Abbott climbed 2.6 percent to $48.58, while Affiliated
Computer advanced 14 percent to $53.86.
                                
 Xerox, which valued the cash-and-stock deal for Affiliated
at an initial $6.4 billion, sank 14.5 percent to $7.68. For
details on Xerox, see [ID:nN28526962]. For details on Abbott,
see [ID:nLS426471]]
                                
 Other deals on Monday included U.S. diversified health-care
company Johnson & Johnson's <JNJ.N> purchase of an 18 percent
stake in biotech firm Crucell <CRCL.AS><CRXL.O> for 302 million
euros ($444 million) as part of a flu vaccine development deal,
the Dutch company said on Monday. [ID:nLS212056]
                                
 The pharmaceuticals index <.DRG> climbed 1.3 percent.
                                
 Crucell fell 6.6 percent to $22.13 on Nasdaq, but J&J, a
Dow component, was up 1.1 percent at $61.27 on the New York
Stock Exchange.
                                
 Apple Inc <AAPL.O> rose 2.1 percent to $186.15 after China
Unicom <0762.HK> said it would sell Apple's iPhone in China,
starting in October. [ID:nHKG249644] France Telecom's <FTE.PA>
Orange also said it would sell the product later this year.
[ID:nHKG249644][ID:nLS206618]
                                
 Apple provided the Nasdaq's top boost, followed by chip
maker Qualcomm Inc <QCOM.O>, up 2.8 percent at $45.97. The
semiconductor index <.SOXX> was up 2.1 percent.
                                
 Cisco Systems Inc <CSCO.O> gained 4.4 percent to $23.61
after Barclays Capital raised its rating on the network
equipment maker, citing improving demand. [ID:nBNG468270]
                                
 Dow Chemical Co <DOW.N> rose nearly 5 percent to $26.39
after U.S. antitrust regulators cleared Dow's $1.68 billion
sale of Morton Salt to Germany's K+S AG. <SDFG.DE>
[ID:nN2872015]
                                
 Other industrial standouts were U.S. aircraft manufacturer
and defense contractor Boeing Co <BA.N>, up 3 percent at
$53.07, and diversified manufacturer 3M Co <MMM.N>, up 1.6
percent at $75.01.
                                
 The Jewish holiday of Yom Kippur observed on Monday kept
volume lighter, with only about 979.3 million shares changing
hands on the New York Stock Exchange, compared with last year's
estimated daily average of 1.49 billion. On the Nasdaq, about
1.92 billion shares traded, below last year's daily average of
2.28 billion.
                                
 Advancing stocks outnumbered declining ones by a ratio of
about 4 to 1 on the NYSE, while on Nasdaq, about 10 stocks rose
for every seven that fell.
 (Editing by Jan Paschal)