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Stocks Turn Higher, Led by Materials

Stocks traded slightly higher amid another day of quiet trading and after a week of strong gains.

The Dow Jones Industrial Average rose more than 15 points after stocks started the second quarter solidly, closing higher on Friday amid optimism over a recovery in the labor market after data showed a drop in unemployment.

Among Dow components, GE, Wal-Mart, and Bank of America gained, while Intel and Hewlett-Packard fell.

The S&P 500 and the Nasdaq traded flat to higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 17.

The recovery in the jobs market will prompt speculation on when the Federal Reserve will start tightening monetary policy.

The European Central Bank is poised to raise interest rates on Thursdayto curb rising inflation, leaving investors to wonder when other central banks will follow suit.

Comments by Federal Reserve Presidents will be closely watched in light of the ECB’s rate-setting meeting. The Bank of England and the Bank of Japan also meet this week.

Atlanta Fed President Dennis Lockhart and Chicago Fed President Charles Evans both speak on Monday morning, while Fed chairman Ben Bernanke speaks at the Atlanta Fed's financial markets conference at 7 p.m.

Developments in the Middle East and North Africa continue to keep investors on their toes. Oil pricesrose Monday with U.S. crude at 2.5-year high, reflecting concerns over supply. U.S. light sweet crude was flat, but just under $108 a barrel, while London Brent crudeclosed above $120.

In company news, Nortel is selling all of its patents and patent applicationsfor a $900 million to Google as part of a "stalking horse" asset-sale agreement. The sale follows a multi-round bidding process.

BP is among stocks in the spotlight after The Sunday Times in Britian said the oil group struck a deal with U.S. regulators which allows it to resume drilling in 10 existing wells in the Gulf of Mexico.

The U.S. Bureau of Ocean Energy Management refuted the report, saying there was no such deal, Reuters said.

General Electric gained after news Chief Executive Jeffrey Immelt defended the nuclear industry's safety record on a trip to Tokyo.

McCormick & Schmick's Seafood Restaurants skyrocketed after Tilman J. Fertitta said he intends to begin an all-cash offer to buy the seafood restaurant company through his affiliiate LSRI Holdings, a subsidiary of Landry's Restaurants.

McDonald's , meanwhile, traded flat after news the fast-food chain planned to hire 50,000 employeeson April 19 as its business grows.

Shares of Southwest Airlines fell after news the airliner canceled 70 flights on Monday after a Boeing 737 was forced to make an emergency landing Friday because of a hole in its fuselage, and that cracks were found in the fuselages of 3 other airlines after 33 were inspected. Boeing shares also fell on the news.

Molycorp soared after news the rare-earth producer bought a majority stake in AS Silmet, one of two rare-earth processing companies in Europe. "In the short-term, this will greatly increase our ability to supply our products into the increasingly tight global rare earth market and provide a convenient base from which to supply European customers," said Mark Smith, president and CEO, in a statement.

And Vivus jumped after the company reported a two-year study showed Qnexa, its weight loss drug, also reduces high blood pressure.

In M&A news, Pfizer rose slightly after news Kohlberg, Kravis & Roberts plans to buy the drugmaker's Capsugel unit for $2.38 billion.

Deutsche Boerse is waiting to hear from NYSE Euronext's board and the credit rating agencies before it will make a counter offer to Nasdaq and IntercontinentalExchange's offer for the stock exchange, sources told Reuters.

European stocks hit a three-week closing high after several merger announcements.

On Tap This Week:

MONDAY: Lockhart speaks, Bernanke speaks, Larry Page takes over as Google CEO.
TUESDAY: ISM non-manufacturing index, FOMC Minutes; Lockhart speaks, Kocherlakota speaks, Plosser speaks; earnings from KB Home before-the-bell.
WEDNESDAY: Weekly mortgage applications oil inventories, Treasury STRIPS; Earnings from Monsanto before-the-bell and Bed Bath & Beyond after-the-bell.
THURSDAY: Monthly chain-store sales, Bank of England Announcement, European Central Bank announcement, jobless claims, consumer credit, money supply; Lacker speaks; earnings from Constellation Brands before-the-bell and Rite Aid after-the-bell.
FRIDAY: Wholesale trade.

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