Stocks gain on merger speculation, crude oil falls

Global equity markets rebounded in rocky trade on Monday after a $100 billion bid for AstraZeneca boosted speculation of further corporate deal-making, while crude oil prices fell as major producer Libya prepared to resume exports.

The Nasdaq composite index shed more than 1 per cent at one point as investors dumped growth shares regardless of companies' first-quarter results, but the tech-rich index recouped almost all losses by the market's close as investors piled into Apple Inc.

"You had more rotation out of the high-beta momentum names, and I think a lot of those tech players rotated into Apple - which just had positive earnings and the buyback and dividend boost - for defensive reasons," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

"This whole M&A aspect of the pharmaceutical healthcare industry has people positively biased for the time being," he said. "The people who had to sell the momentum names are at least finished for the time being and we caught a bounce."

US drugmaker Pfizer Inc said it made a 58.8 billion pound ($98.9 billion) bid for Britain's AstraZeneca Plc after having two bids rejected.

AstraZeneca shares rallied 14.4 per cent in London, while Pfizer rose 4.2 per cent to $32.04 on Wall Street. It was the biggest gainer in the Dow Industrials and the fourth-biggest by percentage points in the benchmark S&P 500 index.

The Dow Jones industrial average rose 87.28 points, or 0.53 per cent, to 16,448.74. The S&P 500 gained 6.03 points, or 0.32 per cent, to 1,869.43, and the Nasdaq Composite dropped 1.161 points, or 0.03 per cent, to 4,074.401.

Apple jumped 3.9 per cent to $594.09, after earlier hitting a 52-week high of $595.75.

MSCI's measure of global equity performance, the all-country world index, rose 0.12 per cent in choppy trade.

In Europe, the pan-regional FTSEurofirst 300 index closed up 0.26 per cent at 1,336.30. Shares of Germany's Bayer rose 3.3 per cent, lifted by the wave of merger speculation in pharmaceuticals.

Brent crude oil slipped below $110 a barrel after Libya lifted force majeure at the eastern oil port of Zueitina, paving the way to restart exports at a second port after a deal with rebels to unblock major terminals.

June Brent fell $1.46 to settle at $108.12 a barrel, while US crude reversed earlier losses to settle up 24 cents at $100.84.

The euro hit a two-week high against the US dollar, helped by safe-haven flows due to the Ukraine crisis and expectations that inflation in the euro zone will show an increase this week, lessening the need for looser monetary policy.

The United States slapped sanctions on seven Russian government officials and 17 companies linked to Russian President Vladimir Putin on Monday in a fresh attempt to force Moscow to back down from its intervention in Ukraine.

"Since the onset of the Ukraine crisis the euro has benefited. We expect that pattern to continue," said Michael Woolfolk, global markets strategist at BNY Mellon in New York.

Woolfolk said even if sanctions impact Russia's main trading partners, the euro will still find demand due to safe-haven capital flight.

"Euros are more easily attained than dollars and there is a concern that dollar-denominated assets could be more easily subjected to sanctions," Woolfolk said.

The euro reached a session high Of $1.3905 before slipping to $1.3852, up 0.15 per cent.

Against the yen, the dollar rose 0.32 per cent, to 102.48 yen.

US Treasury prices fell as investors embraced riskier assets after upbeat housing numbers strengthened the view that the world's largest economy was steadily recovering.

The benchmark 10-year US Treasury note fell 11/32 in price to yield 2.7077 per cent.

Copyright: Thomson Reuters 2014