A businessman walks past an electronic board displaying falling share prices in Tokyo on June 23. The Nikkei slid 1.44 per cent on Friday as Honda Motor and other exporters fell on concern the U.S. Federal Reserve will keep raising interest rates even as the economy slows, denting demand for Japanese goods. - REUTERS/Yuriko Nakao (JAPAN)
new york (reuters)
U.S. STOCKS ROSE on Monday as corporate takeovers boosted investor enthusiasm for equities in a market on edge ahead of the Federal Reserve's meeting this week and the prospect of higher interest rates.
A surprising jump in U.S. home sales in May pushed U.S. Treasury debt prices lower for the ninth day in a row on Monday, the bond market's longest-losing streak in 25 years.
The yield on the benchmark 10-year U.S. Treasury note briefly hit 5.25 per cent -- a four-year high.
The data suggested the critical housing sector may not be sagging as much as some analysts believed and supported views that the Federal Reserve will continue to raise interest rates.
But it was tough talk on inflation from European monetary officials and fresh fears that countries may move some dollar reserves into euros that sent the dollar to a fresh session low on Monday against the euro zone single currency.
The Fed, which meets on Wednesday and Thursday, is widely expected to raise the fed funds rate for a 17th straight time by 25 basis points, moving the rate up to 5.25 per cent in an effort to keep a lid on inflation. But uncertainty about how much further rates will rise has rattled investors.
"It's going to be hard for the market to move one way or the other until we get the FOMC announcement out of the way," said Gary Pollack, head of fixed-income trading and research at Deutsche Bank Private Wealth Management in New York.
DOW JONES ON THE MOVE
U.S. stocks gained after copper miner Phelps Dodge Corp. said it had agreed to buy nickel miners Inco Ltd. and Falconbridge Ltd. in a $40 billion deal.
Shares of Pfizer Inc. rose after the drug maker reached an agreement to sell its consumer health-care arm to Johnson & Johnson for $16.6 billion.
The Dow Jones industrial average gained 56.19 points, or 0.51 per cent, to end at 11,045.28. The Standard & Poor's 500 Index advanced 6.06 points, or 0.49 percent, to finish at 1,250.56. The Nasdaq Composite Index was up 12.20 points, or 0.58 per cent, to close at 2,133.67.
Stocks in Asia finished higher, with Japan's Nikkei average rising 0.2 per cent to 15,152.40, its highest close in three weeks.
In Europe, steel stocks gained on expectations of further consolidation in the sector after Europe's Arcelor finally bowed to an improved takeover bid of 25.6 billion euros from rival Mittal Steel.
Elsewhere in Europe, shares finished slightly lower after comments from ECB Governing Council member, Yves Mersch, which fuelled speculation the bank might step up the pace of interest-rate rises, The FTSEurofirst 300 index dipped 0.3 per cent to close at 1,278.91.
Helped by the ECB comments, the euro rallied earlier in the day, but had pared gains after the home sales data helped the dollar.
The dollar was down against a basket of major trading-partner currencies, with the U.S. dollar Index down 0.4 percent at 86.47 from a previous session close of 86.820.
The euro was up 0.56 percent at $1.2579 from a previous session close of $1.2509. Against the Japanese yen, the dollar was down 0.26 percent at 116.22 from a previous session close of 116.52.
Do
you have a problem? Is something bothering
you? Write to 
