Wall Street indexes rise on M&A news, profits

NEW YORK (Reuters) - U.S. stock indexes gained on Monday as takeover news and strong profits from large-cap companies, such as Merck & Co. (MRK.N), reassured investors after a broad sell-off at the end of last week.

Merck, a Dow component, posted quarterly results that beat analysts' expectations while Halliburton Co. (HAL.N), the world's No. 2 oil services company, also topped forecasts and its shares rose to their highest since June 2006.

Also on Monday, Transocean Inc. (RIG.N), the world's largest offshore driller, said it had agreed to buy drilling rig operator GlobalSantaFe Corp. GSF.N for $18 billion. That proposed merger and other smaller deals showed the Wall Street takeover spree still had legs, analysts said.

"A host of merger news came into play, along with some pretty good earnings, and the market is seeing a snapback rally," said Steve Goldman, market strategist at Weeden & Co. in Greenwich, Connecticut.

"But it's really blue-chip oriented," he added. "As you get to the mature phases of a bull market, gains tend to be concentrated in the more liquid names."

The Dow Jones industrial average .DJI was up 92.34 points, or 0.67 percent, at 13,943.42. The Standard & Poor's 500 Index .SPX was up 7.47 points, or 0.49 percent, at 1,541.57. The Nasdaq Composite Index .IXIC was up 2.98 points, or 0.11 percent, at 2,690.58.

But declining stocks outnumbered advancing ones by a ratio of about 17 to 16 on the New York Stock Exchange and about 8 to 7 on Nasdaq.

After the close, shares of American Express Co. (AXP.N) fell 1.8 percent to $63.50 in extended trade after the credit card company reported quarterly results showing revenues were below Wall Street estimates.

Shares of Texas Instruments Inc. (TXN.N) also dropped in extended trading after the world's biggest maker of chips for mobile phones issued a third-quarter revenue outlook range with a midpoint that was below analysts' forecasts. The stock was down 3.1 percent at $37.

During the regular session, a drop of more than 1 percent in crude oil futures underpinned gains by big manufacturers, such as 3M Co. (MMM.N), whose stock rose 0.7 percent to

$90.87.

Wall Street stocks had slid on Friday amid concerns about the economic impact of the housing slowdown and corporate profits. Among the key disappointments was Caterpillar Inc. (CAT.N), which cited weakness in the North American construction market.

On Monday, Merck shares jumped 6.8 percent to $52.33 and had their biggest gain in more than three months. The index of pharmaceutical stocks .DRG was last up 1 percent.

Halliburton Co. (HAL.N), the world's second-largest oil services company, also beat profit expectations, sending its shares up 3.2 percent to end at $37.74. During the session, shares hit $38.29, their highest since June 2006.

Shares of Transocean rose 5.5 percent to $115.96 on the New York Stock Exchange. GlobalSantaFe's shares advanced by 4.8 percent to $78.33. The S&P oil and gas index .GSPOILD jumped 4.1 percent.

In other deal news, United Rentals Inc. (URI.N), the world's largest equipment rental company, said it had agreed to be bought by private equity firm Cerberus Capital Management for $4 billion.

United Rentals shares rose 1.9 percent to $32.98.

But Expedia Inc. (EXPE.O), the largest online travel agency, slid 9.1 percent to $26.71 on Nasdaq after it slashed its share repurchase plan, blaming a lack of attractive financing in credit markets.

U.S. crude oil futures fell after OPEC's president voiced concern about high oil prices affecting the global economy. September crude CLU7 declined 90 cents, or 1.2 percent, to settle at $74.89 per barrel.

Trading was active on the NYSE, with about 1.52 billion shares changing hands, below last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.05 billion shares were traded, below last year's daily average of 2.02 billion.