US stocks advanced on Monday on relief that Abu Dhabi's $10 billion in aid would help neighbouring Dubai avoid default, and a take-over deal by oil and gas giant Exxon Mobil Corp fed optimism about the increase in mergers and acquisitions. Citigroup Inc's plan to repay US government bailout funds also helped push stocks higher.
Exxon Mobil said it would buy natural gas supplier XTO Energy Inc in an all-stock transaction valued at about $30 billion, excluding debt. Abu Dhabi said on Monday it will provide Dubai $10 billion in bailout money, with $4.1 billion for payment on a maturing bond.
"All the news in the morning gave a positive bias and after the early boost, it's been holding the gains nicely ... which is really how the market's been working for quite awhile now. It takes in good news, shrugs off bad news and continues to work its way higher," said Scott Marcouiller, senior equity strategist at Wells Fargo Advisors in St. Louis.
The Dow Jones industrial average was up 26.53 points, or 0.25 percent, at 10,498.03. The Standard & Poor's 500 Index was up 6.58 points, or 0.59 percent, at 1,112.99. The Nasdaq Composite Index was up 17.75 points, or 0.81 percent, at 2,208.06.
Citigroup laid out a plan to repay the money it owes the US government, including raising money by selling $17 billion of common stock immediately, as the bank looks to end the restrictions on executive pay that came with the funds. Citi's stock fell 5.6 percent to $3.73.
Shares of XTO jumped 14.9 percent to $47.66, while Exxon Mobil fell 4.4 percent to $69.61 in New York Stock Exchange trading. The First Trust ISE-Revere Natural Gas Index Fund, an exchange-traded fund of natural gas companies' shares, rose 5.2 percent. XTO has underperformed that ETF by roughly 14 percent this year.
Sun Microsystems Inc shares shot up 10.3 percent to $9.22 on Nasdaq after European Union regulators signalled they could clear Oracle Corp's $7 billion take-over of Sun after Oracle promised measures to ease competition concerns.
Oracle's stock gained 1.9 percent to $23.21 in Nasdaq trading. Britain's Cadbury Plc said it has received interest from other bidders after raising its growth targets and reporting upbeat trading as it dismissed a $16.5 billion bid from Kraft Foods Inc Kraft's stock was up 0.6 percent at $26.96, off a session high at $27.08.