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Stocks Rally as Gold Tops $1,200

Stocks kicked off December with a rally Tuesday as Dubai fears subsided and the dollar retreated, pushing gold to a new record above $1,200 an ounce.

The Dow Jones Industrial Average was up more than 120 points, near its highs for the day, after paring gains briefly following a lower-than-expected ISM report on manufacturing.

Ford shares rose more than 1 percent after the auto maker reported its sales rose 8.6 percent in November, better than expected.

Pfizer was the biggest gainer on the Dow after the drug maker said it has acquired the rights to a treatment for a Gaucher disease, a rare genetic disorder that triggers the accumulation of a fatty substance in cells and some organs. Rare-disease treatments have become increasingly attractive to drug makers as treatments are often expensive and the revenue generated can be substantial.

The big buzz in the U.S. markets today is that General Electric has agreed to pay Vivendi $5.8 billion for its 20 percent stake in CNBC parent NBC Universal, clearing the path for a proposed deal to give Comcast a 51 percent stake in NBCU.

Most Dow components advanced, except for JPMorgan and American Express — two of the best performers in Monday's session.

Banks were actually divided after analyst Dick Bove said he's concerned that the government wants to increase capital requirements for banks. Of the top 30, Bove said, only 4 don't need to raise capital. Those four were mostly higher: Citigroup, State Street, Northern Trust and First Horizon.

In a morning wave of economic news: The ISM reported its gauge of manufacturing activity slipped to 53.6 in November from 55.7 in October, missing expectations but still in growth mode. Anything over 50 represents expansion. Pending-home sales rose 3.7 percent to their highest level in 2 1/2 years and construction spending was unchanged — both for October.

This came after stocks pulled off a modest gain Monday, with the Dow up 0.3 percent and closing the month up 6.5 percent.

Global markets seemed assuaged by Dubai's restructuring plans, with most major indexes in Europe and Asia up more than 1 percent.

In China, a pair of business surveys showed the economy is ending the year on a strong note, laying the groundwork for solid expansion in 2010.

The dollar retreated against most major currencies, and both oil and gold rose — gold topped $1,200 an ounce.

Plus, online-shopping sites reported a surge in sales on "Cyber Monday," a day that isn't typically one of the biggest online-shopping days of the year but is closely watched nonetheless. This year could be different: As of 6:30 pm Eastern time Monday, shoppers had spent 11 percent more online than they did on the same day last year, the Wall Street Journal reported, citing statistics from Coremetrics.

Retailers mostly declined on Monday as more shoppers hit the stores over Black Friday weekend but on average spent less, but online retailers Amazon and eBay advanced.

AIGreduced its debt to the government by $25 billion, giving the government stakes in two of its units totaling that amount ahead of their planned spinoff.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

Financials were the big winners on Monday as investors bet that any Dubai impact on U.S. banks would be limited.

The earnings calendar is extremely light once again this morning, but we will get quarterly numbers from office supplies retailer Staples before the opening bell.

- Peter Schacknow and Reuters contributed to this article.

Correction: An earlier version of this story said Credit Suisse downgraded its rating AIG to "underperform" today. Credit Suisse actually downgraded the stock to "underperform" in September and reiterated that rating a few weeks ago.

This Week:

TUESDAY: Auto sales; pending-home sales; ISM manufacturing; construction spending; Fed's Plosser speaks; Obama speaks; Earnings from Staples
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Challenger, ADP jobs reports; Fed's Lacker speaks; Fed's beige book; Earnings from Aeropostale
THURSDAY: Chain-store sales; weekly jobless claims; ECB, UK rate meetings; Bernanke renomination hearing; ISM services index; Earnings from Toll Brothers, Marvell Tech and Novell
FRIDAY: November jobs report; Fed's Plosser, Bullard speak; factory orders; Earnings from Big Lots

Send comments to cindy.perman@nbcuni.com.