NEW YORK, Oct 29 (Reuters) - A recovery in technology stocks following IBM Corp's $34 billion deal to buy Red Hat Inc and Standard & Poor's decision to leave Italy's ratings level unchanged helped global stocks rebound on Monday after choppy sessions last week.
The signs of increased mergers and acquisitions activity helped start the trading week on a positive note, said Art Hogan, chief market strategist at B. Riley FBR in New York.
"Investors are coming in today from an oversold market last week," he said. "Markets are set to have a positive reaction to any form of good news."
The Dow Jones Industrial Average rose 204.88 points, or 0.83 percent, to 24,893.19, the S&P 500 gained 27.3 points, or 1.03 percent, to 2,685.99 and the Nasdaq Composite added 41.65 points, or 0.58 percent, to 7,208.86.
The gains came after shares in Europe rose broadly following Standard & Poor's decision to leave Italy's sovereign rating unchanged, prompting relief there was no ratings downgrade.
The MSCI world equity index extended early gains to rise 0.4 percent. The index is down 9.3 percent so far this month and has shed $6.7 trillion in market value since its January peak.
Europe's autos sector jumped 4.9 percent, its strongest day since August 2015, after a report that China was considering halving the tax on car purchases in an attempt to boost demand for autos, which has been hurt by a trade war and slowing economic growth.
In the United States, automakers Ford Motors Co and General Motors Co both gained more than 4 percent.
Despite gains on Monday, investors remained wary of betting on a turnaround in risk.
"The only way I can summarize the core sentiment among the European investors I met is something like 'pretty grim'," wrote Erik Nielsen, group chief economist at UniCredit, in a note to clients.
Asian stock trading was dampened by Chinas blue-chip index which tumbled more than 3.3 percent. Chinese data underscored worries of a cooling economy as profit growth at its industrial firms slowed for the fifth consecutive month in September due to ebbing sales of raw materials and manufactured goods.
Many indices are already in official correction territory amid heightened worries over corporate earnings and global growth.
"With the volatility of the last week or so, today's stronger open to markets should not be seen as a sea change but more a pause for breath," said Edward Park, investment director at Brooks Macdonald.
Analysts have been downgrading their estimates for European earnings at the fastest pace since February 2016, and weak results from internet companies Amazon.com Inc and Alphabet Inc hurt U.S. stocks at the end of last week.
Benchmark 10-year notes last fell 9/32 in price to yield 3.1075 percent, from 3.076 percent late on Friday.
U.S. crude fell 0.74 percent to $67.09 per barrel and Brent was last at $77.32, down 0.39 percent on the day.
(Reporting by David Randall Editing by Susan Thomas)