U.S. stocks climbed broadly Monday as a bigger than expected increase in retail sales for October set a positive tone for the holiday shopping season set to kick off in earnest next week. The Dow Jones Industrial Average rose 54 points, or 0.5%, to 11247, in recent trading.

Caterpillar led the measure's gains with a 2.6% jump after the heavy equipment company said it will buy mining equipment firm Bucyrus International for about $7.6 billion. Caterpillar will pay $92 for each Bucyrus share, a 32% premium to Friday's closing price. Shares of Bucyrus, which isn't a Dow stock, surged 29% to $89.80.

J.P. Morgan Chase was also strong with a 1.8% increase. The banking giant said it more than doubled the amount of loans it has offered through the Small Business Administration in fiscal 2010, which made the banking giant the most prolific lender in the agency's program for the year.

The Nasdaq Composite edged up 0.3% to 2525. The Standard & Poor's 500 stock index added 0.4% to 1204. The advance came as data showed U.S. retail sales surged in October, topping expectations on robust car sales and solid spending for a broad array of merchandise.

Retail sales rose 1.2% last month, the fourth consecutive increase and the biggest rise since March. The strong auto sales helped boost shares of Ford Motor, which climbed 5.9%. Retail stocks also climbed on the report, with Office Depot up 2%, Starbucks up 2.2% and Polo Ralph Lauren up 1.9%. Other data released Monday were less encouraging.

The November reading of New York area manufacturing activity from the Federal Reserve Bank of New York fell into negative territory. Meanwhile, investors fretted that the bigger than expected increase in inventories at U.S. businesses in September could leave companies holding too much inventory if the holiday shopping season disappoints.

European markets

European stock markets finished higher Monday, as deal speculation and U.S. economic data, showing a rise in retail sales, buoyed sentiment. The Stoxx Europe 600 index gained 0.8% to end at 272.36. Setting the pace, France's CAC 40 index rose 0.9% to 3,864.24. Germany's DAX 30 index rose 0.8% to 6,790.17, with the U.K.'s FTSE 100 index adding 0.4% to end at 5,820.41, as shares of platinum producer Lonmin rose 4% following well received financial results.

Deal talk involving several European firms also boosted investors' mood. Shares of MAN rallied more than 6% after the truck maker and Swedish peer Scania AB confirmed merger talks but said no final decision has been made. The two firms have been involved in cooperative talks for several months and said a merger was one option to reap potential synergies.

In Sweden, shares of Scania rose 1.4%. And in London, shares of information technology group Invensys PLC surged more than 9% on weekend press speculation that it could be a takeover target of China Southern Rail. In a statement, Invensys denied it had received an approach or had any discussions regarding a possible offer for the company or about a strategic partner taking a minority stake. Sovereign debt issues were in focus as officials in Ireland insisted over the weekend that they didn't need more help from the European Union.

The Financial Times reported Monday that officials held informal talks into Sunday evening to determine whether a bailout package was needed by the market open. Talks broke up, the newspaper said, without action. Shares of Allied Irish Banks PLC rallied 5.7% in Dublin, recovering from intraday losses, as the Irish ISEQ rose 0.7%.

Asian markets

Asian stock markets ended mixed Monday with better than expected economic growth data lifting stocks in Japan, while Chinese banks rose as concerns about additional monetary tightening in the domestic economy start to fade. But sentiment was cautious amid concerns of renewed European sovereign debt problems.

Japan's Nikkei Stock Average ended 1.1% higher, South Korea's Kospi Composite was flat, Hong Kong's Hang Seng Index fell 0.8%, while China's Shanghai Composite ended 1.0% higher. Citigroup issued an upbeat report on the regional outlook, saying stocks didn't appeared overvalued on a variety of measures that historically have provided warning of excessive exuberance.

European leaders over the weekend urged Ireland to accept a bailout from the European Union's emergency loan facility, to help restore confidence in financial markets and avert a spread of worries to other euro-zone members, even as Ireland denied it needed assistance. The news helped to bolster the euro against the yen, boosting some exporters in Tokyo trade.

Among companies with relatively high exposure to Europe, Mazda added 1.4%, Canon added 0.3% and Konica Minolta rose 1.6%. Sentiment in the Tokyo market also got a boost after data showed Japan's real gross domestic product jumped 3.9% in annualized terms in the third quarter, beating expectations for a 2.5% expansion.

Chinese banking stocks were mostly higher after an expected tightening in reserve ratio requirements over the weekend didn't materialize. Local media reports Friday had said such an increase may have been in the cards. But local media also quoted People's Bank of China officials Monday saying the country needed to adopt a more prudent monetary policy. Industrial & Commercial Bank of China rose 6.8% in Shanghai after falling 1.9% in the previous session. But its Hong Kong-traded shares fell 1.8%.

Base metals

Copper closed higher on the London Metal Exchange Monday, having pared early losses as U.S. equity markets rose on better than expected retail sales numbers. While copper was the only base metal to close the PM kerb higher on the day, the other markets were also able to rebound off their intra-day lows on improved sentiment and some dip buying following the sharp pullback in the previous session.

Crude futures rose slightly Monday following last week's sell off, with an upbeat report on Japanese economic growth helping prop up prices. Light, sweet crude for December delivery closed 2 cents higher at $84.90 a barrel on the New York Mercantile Exchange. Oil prices got a lift from the Japanese government's report that real gross domestic product rose 3.9% during the July to September period, up from a revised 1.8% during the previous quarter.

The figure beat forecasts from analysts surveyed by Dow Jones Newswires and marked the fourth straight quarter of economic growth in the world's No. 3 oil consumer. Euro worries failed to reignite gold's rally as a stronger dollar weighed on prices. The most actively traded contract, for December delivery, settled up 0.2%, or $3, at $1,368.50 per troy ounce on the Comex division of the New York Mercantile Exchange.

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