Stocks Open Higher on Takeover Talks

NEW YORK -- Stocks rose sharply Wednesday as takeover talks revived investors' hope that the recent tightness in credit won't dampen mergers and acquisitions.

Wall Street, which has been angling for the Federal Reserve to mitigate the growing credit crunch by cutting the benchmark federal funds rate, has been knocked down several rungs in recent weeks by worries about lending troubles crimping economic and corporate growth. Mergers and acquisitions, especially by private equity firms, had been one of the market's biggest drivers this year.

But Wednesday, investors were heartened by several reports about possible deals. The Wall Street Journal reported that online brokerages TD Ameritrade Holding Corp. and E-Trade Financial Corp. are said to have been in discussions about a possible deal for weeks, though they are not close to a deal.

Meanwhile, Nymex Holdings Inc. Chairman Richard Schaeffer said Tuesday the commodities exchange owner has held preliminary discussions about a potential combination, but there is no guarantee of a deal.

And Dubai World, a holding company for the Persian Gulf state, is looking to acquire a 9.5 percent stake in MGM Mirage, and a 50 percent ownership in the company's CityCenter development project, according to the Journal. The casino and resort company is controlled by billionaire investor Kirk Kerkorian.

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In the first hour of trading, the Dow Jones industrial average rose shot up 108.44, or 0.83 percent, to 13,199.30.

Broader stock indicators also jumped. The Standard & Poor's 500 index rose 14.96, or 1.03 percent, to 1,462.08, while the Nasdaq composite index gained 26.23, or 1.04 percent, to 2,547.53.

Bonds fell as stocks rose. The yield on the benchmark 10-year Treasury note jumped to 4.66 percent from 4.59 percent late Tuesday, and the 3-month Treasury bill — which earlier in the week drew massive buying as investors scrambled to get safe short-term assets — saw its yield rise to 3.80 percent from 3.59 percent late Tuesday.

The dollar was mixed against other major currencies, while gold prices rose.

Crude oil prices rose 39 cents to $69.96 a barrel in preopening trading on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 11.04, or 1.40 percent, to 799.42.

Overseas, Japan's Nikkei stock average fell less than 0.01 percent. In afternoon trading, Britain's FTSE 100 was up 1.36 percent, Germany's DAX index was up 1.10 percent, and France's CAC-40 was up 1.88 percent.

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