Stocks Rise, Buoyed by Mergers, Greece News

Stocks advanced Monday amid some M&A news and expectations that a Greek bailout is coming soon.

The Dow was up more than 70 points, led by Intel , Caterpillar and Pfizer.

JPMorgan, Wal-Mart and GE led Dow decliners.

The dollar advancedagainst the euro as uncertainty about the Greek bailout remained. Oil hovered around $80 a barreland gold hung around $1,118 an ounce.

Copper prices hit a five-week highas the massive earthquake that hit Chile, the No. 1 copper-producing nation, over the weekend halted 20 percent of its output.

Consumers have been a lagging factor in the recovery but some good news on the consumer front this morning: Personal spending rose 0.5 percentin January, even though income gained only 0.1 percent. Economists had expected both numbers to reflect 0.4 percent gains.

Spending on both durable and nondurable goods was strong, Ian Shepherdson of High Frequency Economics pointed out in a note this morning, adding that even if real spending is unchanged in February, the quarterly increase will still be about 2.2 percent — maybe even 2.5 percent. Still, with weak consumer confidence data, there are concerns about the consumer going forward, Shepherdson said.

The ISM's manufacturing gauge fell to 56.5 in February from 58.4 in January, lower than the 57.5 expected but it remained over 50, which indicates growth. Plus, the employment index rose sharply. Separately, construction spending fell for a third straight monthin January to its lowest level since June 2003.

On the M&A front: AIGhas agreed to sell its Asian life insurance unit to the UK's Prudential for about $35.5 billion, a transaction which will help AIG pay back some of the government's bailout money.

And Milliporeagreed to buy Germany's Merck Merck (no relation to the U.S. company of the same name) for about $6 billion in cash.

In news that does involve Dow component Merck , AstraZeneca said it plays to exercise an option to buy rights to Entocort, Atacand and Plendil and several other products under development. AstraZeneca said it plans to exercise the option in April.

SanDisk shares jumped after the flash-memory maker raised its revenue forecast and said the outlook for the industry in the next few years is strong.

European banking leader HSBC reported a $7 billion profit that nonetheless missed Wall Street expectations.

Warren Buffett struck a positive note in his annual letter to shareholders, which came out on Saturday. He reported that Berkshire Hathaway's earnings jumped 61 percent in 2009 and its book value surged 20 percent to record high as the company did some bargain hunting and some bets that paid off, including GE and Goldman Sachs.

This was a sharp contrast to a year earlier when the billionaire investor humbly reported the company's second ever decline in book value.

He had some harsh words for CEOs and directors who were involved in the financial crisis but "still live in grand style."

He offered some classic Buffett advice: "When it's raining gold, reach for a bucket, not a thimble."

And, of course, he had to crack a few jokes, including this one about country music: "Sing a country song in reverse, and you will quickly recover your car, house and wife."

In an appearance on CNBC this morning, Buffett said, "Stocks are a lot less attractive now than they were a year ago." (Read a transcript and see video clips.)

Toyota CEO Akio Toyoda is in China to meet with officials and the media, as he seeks to ease quality concerns following the massive recalls of Toyota vehicles.

On the Calendar:

MONDAY: Construction spending; ISM manufacturing; Earnings from Dish network
TUESDAY: Obama town hall; auto sales; Fed's Kocherlakota speaks; Earnings from AutoZone, Staples
WEDNESDAY: Weekly mortgage applications; Challenger, ADP jobs reports; Fed's Fisher, Lockhart speak; ISM services; weekly crude inventories; Fed's beige book; earnings from BJ's and Costco
THURSDAY: Citi's Pandit testifies at COP hearing; retailers report chain-store sales; BOE, ECB rate decisions; weekly jobless claims; pending-home sales; factory orders; Fed's Bullard, Evans speak; Earnings from Anheuser-Busch and Marvell Tech
FRIDAY: February jobs report; consumer credit

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