U.S. Stock Markets

U.S. stocks jumped Monday, pushing the Nasdaq Composite into positive territory for the year and the Standard & Poor's 500-stock index to the cusp of it, though stocks moved off session highs in late trade. The Dow Jones Industrial Average advanced 78 points, or 0.7%, to 11889 in late afternoon action. Caterpillar was leading blue chips, gaining 4.8% after the maker of construction and mining equipment reported third-quarter earnings that beat expectations and raised its outlook for the year.

The Standard & Poor's 500-stock index added 12 points, or 1%, to 1251, led by materials, financial and technology stocks. The index was 0.55% below break-even for 2011 as of late afternoon. The Nasdaq Composite gained 55 points, or 2.1%, to 2693. Investors reacted to a set of merger announcements and were heartened by the lack of new negatives from Europe, whose sovereign-debt crisis has wracked investors for months.

Cigna added 0.8% after making a bet on Medicare with a $3.8 billion deal for HealthSpring, which surged 34%. HealthSpring focuses on Medicare Advantage, which provides elderly people Medicare services through private companies.

Oracle rose 1.8%, and RightNow Technologies surged 19% after the business-software company said it would buy the cloud-computing firm in a deal valued at $1.43 billion.

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Sara Lee sold the majority of its North American food-service coffee and tea operations to J.M. Smucker for $350 million in cash. Sara Lee lost 0.6%, and Smucker shares added 0.5%. Mattel agreed to buy HIT Entertainment, which sells the Bob the Builder and Fireman Sam toy lines, for $680 million, from a consortium led by Apax Partners funds. The deal also gives Mattel ownership of well-known preschool brands Thomas & Friends and Barney. Mattel rose 2.1%.

European Stocks

European stocks rose Monday, buoyed by news that euro-zone leaders were making progress toward agreeing measures to tackle the sovereign debt crisis.

The pan-European Stoxx 600 index climbed 1.3% to end at 242.03. The U.K.'s FTSE 100 index added 1.1% to 5548.06, France's CAC-40 index ended up 1.5% at 3220.46 and Germany's DAX rose 1.4% to 6055.27.

European Union leaders said Sunday they made progress and will announce a comprehensive package of measures to tackle the debt crisis Wednesday.

The package is expected to center on recapitalizing European banks, addressing Greece's debt burden and boosting the firepower of the European Financial Stability Facility, the euro zone's rescue fund.

Investors also digested news that the preliminary composite purchasing managers index for the euro zone fell to 47.2 in October, signaling a second successive monthly contraction of the private-sector economy and the fastest rate of decline since July 2009.

Greek stocks bucked the positive trend, with the ASE Composite index sinking 4.5% to 747.08. Piraeus Bank SA fell more than 22%, Alpha Bank AE dropped 19.1% and National Bank of Greece declined nearly 21%.

The losses follow unconfirmed media reports that private bondholders may have to take as much as a 60% loss on holdings of Greek debt. That would be substantially higher than the 21% haircut agreed in a July deal. In Italy, the FTSE MIB index reversed earlier losses to end up 0.7% at 16,232.26.

Prime Minister Silvio Berlusconi called a special cabinet meeting for Monday evening after he came under pressure from other euro-zone leaders at a weekend summit in Brussels to do more to boost growth and reduce Italy's debt burden.

In London, miners led gains following data from China showing an expansion in the manufacturing sector in October. Antofagasta PLC rallied 7.5%, Kazakhmys PLC advanced 8% and Rio Tinto PLC gained 7.1%. European steel and building-materials firms also rose, with Kloeckner & Co. SE up 7.7% and HeidelbergCement AG up 6% in Frankfurt. ArcelorMittal rose 5.5% in Amsterdam. U.K. banks were also higher, with Barclays PLC up 2.6% and Lloyds Banking Group PLC up 5.3%.

Meanwhile, Societe Generale SA added 4.1% in France, while in Germany, Commerzbank AG up 3.2%. Another big gainer in Europe was Faurecia SA, whose shares rallied 12.3% in Paris after the car parts maker said its third quarter sales rose 16% from the year ago period and confirmed its 2011 goals. Shares of TomTom NV surged nearly 19% in Amsterdam after the navigation-system maker launched a restructuring program.

Asian Markets

Asian equity markets rose sharply Monday on signs European leaders are making progress on a plan to contain the euro-zone debt crisis and as data pointed to an improvement in Chinese manufacturing activity. Hong Kong's Hang Seng Index surged 4.1%, Japan's Nikkei Stock Average advanced 1.9%, South Korea's Kospi jumped 3.3%, and the Shanghai Composite Index closed 2.3% higher.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said at a joint press conference Sunday following a European Union summit on the euro-zone debt crisis that a broad agreement is taking shape.

While many Asian equity markets opened higher on the European developments, most extended their gains after Chinese data suggested the nation's key manufacturing sector has returned to expansion after a recent slowdown.

Preliminary results from a monthly survey of Chinese manufacturing climbed to a five-month high of 51.1 points in October, according to a survey released by HSBC Monday.

Shares of many resource-sector companies often viewed as a proxy for economic growth expectations were among the best performers in Asia Monday, helped by gains in commodity prices.

Aluminum Corp. of China Ltd. rose 6.4%, Jiangxi Copper Co. spiked 11.2%, and Cnooc Ltd. climbed 6.5% in Hong Kong. Japanese trading houses were also higher, with Mitsubishi Corp. up 3.3% and Itochu Corp. up 4%. Likewise, banks advanced following the European assurances of a pending rescue deal, with Nomura Holdings Inc. up 2.1% in Tokyo, while in Hong Kong, Agricultural Bank of China Ltd. surged 8.1%, and Bank of China Ltd. climbed 6% in Hong Kong. Also among the major gainers were Chinese property plays, with China Resources Land Ltd. rising 10%, and Hang Lung Properties Ltd. up 6.8% in Hong Kong, and China Vanke Co. adding 5% on the Shenzhen bourse.

Commodities

Base metals closed the day sharply higher on the London Metal Exchange Monday, as copper rallied to its highest close price in more than a month.

Confidence that progress is being made on resolving the euro zone's debt crisis boosted risk-related assets Monday, while strong economic data from top metals consumer China provided an extra boost for base metals.

At the close, LME copper was up 6.9% on the day at $7,635 a metric ton, its highest closing price since Sept. 22. At the day's peak of $7,671.25/ton, copper was up 7.4% on the day and 14.3% higher than Thursday's two-week low of $6,710/ton.

Nickel saw similar gains, closing 6.3% higher at $19,990/ton. Crude oil futures rose to their highest level in nearly three months in heavy trading Monday, settling above $90 a barrel as a condition emerged in the market suggesting a supply squeeze in the near term.

The spread between the Nymex crude-oil contracts for the current month and next month turned strongly positive Monday, entering a state called "backwardation" in which it is more expensive to buy a commodity now than in the future.

This condition is the opposite of the market's state for most of the time since the financial crisis exploded in September 2008, suggesting the supply-demand picture is tightening. It is a bullish signal for oil traders, stimulating long investment or, at a minimum, the closing out of short positions.

Light, sweet crude oil for December delivery settled up $3.87, or 4.4%, at $91.27 a barrel on the New York Mercantile Exchange. Brent crude oil on the ICE Futures Europe exchange ended the day up $1.89, or 1.7%, to $111.45 a barrel.

Gold futures cinched their second day of gains amid hopes of a comprehensive solution to Europe's debt crisis and robust demand for physical gold in Asia. December delivery gold, the most active contract, rallied $16.20, or 1%, to settle at $1,652.30 a troy ounce on the Comex division of the New York Mercantile Exchange.