US STOCKS-Wall Street stocks rise on M&A optimism

* AT&T to buy T-Mobile USA from Deutsche Telekom

* Buffett: Japan quake is "buying opportunity" in stocks

* Stocks up: Dow 1.6 pct, S&P 1.5 pct, Nasdaq 1.9 pct

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to noon, changes byline)

By Caroline Valetkevitch

NEW YORK, March 21 (Reuters) - U.S. stocks advanced more
than 1 percent on Monday after AT&T said it would buy wireless
rival T-Mobile, sparking expectations of more deal activity,
while investors kept close watch on Japan's nuclear crisis.

The AT&T deal, which would create the largest wireless
phone operator in the United States, boosted hopes for more M&A
activity.

Glimmers of hope about Japan's nuclear crisis and investor
Warren Buffett's comments about a buying opportunity for
Japanese stocks also boosted investor sentiment.

The iShares MSCI Japan Index Fund (EWJ.P) was up 1.8
percent.

Stocks posted losses last week as uncertainty about the
crisis in Japan kept investors on edge.

AT&T Inc (T.N) said it would pay $39 billion for Deutsche
Telekom AG's (DTEGn.DE) T-Mobile USA, sparking a sharp rally in
European telecom shares. For details, see [ID:nN20237333]

AT&T shares were up 0.7 percent to $28.14. In European
market, Deutsche Telecom rose 13.1 percent and Vodafone Plc
(VOD.L) was up 3.9 percent.

"Any sort of M&A activity has a beneficial impact on the
market as a whole because it gives the impression corporate
insiders see value in the market," said Thomas Villalta,
portfolio manager for Jones Villalta Asset Management in
Austin, Texas, which he said has a small holding in telecom
services.

Shares of AT&T competitor Sprint Nextel Corp (S.N)
plummeted 16.2 percent at $4.23.

The Dow Jones industrial average .DJI was up 186.78
points, or 1.58 percent, at 12,045.30. The Standard & Poor's
500 Index .SPX was up 19.54 points, or 1.53 percent, at
1,298.74. The Nasdaq Composite Index .IXIC was up 51.35
points, or 1.94 percent, at 2,695.02.

The Nasdaq briefly rose more than 2 percent, helped by
gains in semiconductor shares. An index of semiconductors
.SOX was up 2.3 percent. The index fell about 9 percent over
the last two weeks.

In Japan, power cables have been connected to all six
nuclear reactors at a power plant damaged by an earthquake and
tsunami. The World Health Organization said radiation found in
food from the area near the damaged nuclear plant was a
"serious situation." [ID:nL3E7EK08V]

Investors also kept a careful eye on events in Libya where
Western powers launched a second wave of air strikes early
Monday against the forces of Muammar Gaddafi.

Libya and unrest in the Middle East pushed oil prices more
than 1 percent higher. Brent crude futures LCOc1 rose to
$115.25 a barrel.
(Reporting by Caroline Valetkevitch, additional reporting by
Angela Moon; Editing by Kenneth Barry)