Dubai bailout, Exxon deal push Wall St to 14-month high

NEW YORK: US stocks closed at 14-month highs on Monday as Abu Dhabi's US$10 billion (RM34 billion) in aid to help Dubai avoid default eased concerns and a takeover deal by Exxon Mobil Corp raised optimism about mergers and acquisitions activity.

Citigroup Inc's plan to repay the US government about US$20 billion in bailout funds also helped buttress the buoyant mood a week after Bank of America fully repaid its US$45 billion government loan.

Exxon Mobil said it would buy natural gas supplier XTO Energy Inc in an all-stock transaction valued at about US$30 billion, excluding debt.

Abu Dhabi said on Monday it will provide Dubai US$10 billion in bailout money, with US$4.1 billion for payment on a maturing bond.

"It certainly eases the strain on European banks and that, in turn, increases confidence in the financial system in general," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"We've seen in the last 18 months how these things can spiral out, if you will, from what appears to be well contained to envelop firms all over the world."

The Dow Jones industrial average gained 29.55 points, or 0.28%, to end at 10,501.05. The Standard & Poor's 500 Index rose 7.70 points, or 0.70%, to 1,114.11. The Nasdaq Composite Index climbed 21.79 points, or 0.99%, to close at 2,212.10.

The closing levels for the Dow and the S&P 500 represent 14-month highs, while the Nasdaq ended at its highest level in 15 months.

Citigroup laid out a plan to repay the money it owes the US government, including raising money by selling US$17 billion of common stock immediately, as the bank looks to end the restrictions on executive pay that came with the funds.

Citi's stock slumped 6.3% to US$3.70.

Shares of XTO surged 15.4% to US$47.86.

In contrast, Exxon Mobil shed 4.3% to US$69.69 and ranked as the top drag on the Dow.

The NYSE Arca Natural Gas index gained 4.5%.

The First Trust ISE-Revere Natural Gas Index Fund, an exchange-traded fund of natural gas companies' shares, rose 5.3%. XTO has underperformed that ETF by roughly 14% this year.

Sun Microsystems Inc shares jumped 11% to US$9.28 on Nasdaq after European Union regulators signaled they could clear Oracle Corp's US$7 billion takeover of Sun after Oracle promised measures to ease competition concerns. Oracle's stock rose 2.3% to US$23.31.

Visa Inc shares rose 4.2% to US$84.77 on the New York Stock Exchange after ratings agency Standard & Poor's said late Friday the credit card company will replace telecommunications equipment maker Ciena Corp in the S&P 500 after the close of trading on Dec 18.

S&P also said Bristol-Myers Squibb's spin-off, Mead Johnson Nutrition Co, will relace bond insurer MBIA Inc in the S&P 500 on the same date. Mead Johnson shares climbed 1.8% to US$43.23.

Volume was light on the New York Stock Exchange, with only about 1.07 billion shares changing hands, below last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 1.85 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 3 to 1, while on the Nasdaq, about two stocks rose for every one that fell. — Reuters