US stocks: Markets end higher as AIG surges

NEW YORK - US stocks ended higher on Monday as crude oil retreated from record highs, while a surge of almost 5 per cent in shares of insurer American International Group Inc. boosted the Dow.

AIG climbed after New York Attorney General Eliot Spitzer said he expects to reach a "civil resolution" with the insurer, calming fears that his investigation could lead to criminal charges against the company. Its stock rose US$2.35 to US$53.30.

Meanwhile, a slip in crude oil futures helped stocks. Crude for May delivery settled down 26 cents at US$57.01 a barrel -- retreating from a record high hit in overnight electronic trade of US$58.28.

High crude prices hurt corporate profits and consumer spending, and a fall in oil prices generally helps the market.

The Dow Jones industrial average gained 16.84 points, or 0.16 per cent, to close at 10,421.14. The Standard & Poor's 500 Index gained 3.20 points, or 0.27 per cent, to end at 1,176.12. The technology-laced Nasdaq Composite Index gained 6.26 points, or 0.32 per cent, to 1,991.07.

It marked a reversal from earlier in the session, when the Dow touched a new intraday low for 2005, falling to 10,356.71, its lowest level since early November.

"The turnaround is mainly on oil," said Neil Massa, senior trader at John Hancock Funds. "It was above US$58 this morning ... but now it's turned around and the market has changed direction. "

He also pointed to some confidence about upcoming earnings announcements.

Among stocks gaining were those sensitive to high oil prices, such as retailers sensitive to consumer spending power. Wal-Mart Stores Inc., a Dow component, rose 42 cents, or 0.9 per cent, to US$49.41.

"What's driving (the market) today is oil -- it started the day higher but has come off," said John Hughes, managing director at Epiphany Equity Research. "Also, the news out of AIG almost did more for the market than oil did. "

Among stocks gaining was consumer products giant Procter & Gamble Co., up US$1.29, or 2.5 per cent, at US$53.90 after it said it will raise list prices to retail customers of a premium brand coffee. P&G also is among the 30 stocks in the Dow.

Shares of investment bank Morgan Stanley rose 2.5 per cent, or US$1.43, to US$58.30 after its board approved the sale of its Discover Card unit, according to a Dow Jones report.

Meanwhile, Unocal Corp. slipped after ChevronTexaco Corp. agreed to buy the oil company for about US$16.4 billion.

Unocal's stock, which had surged nearly 60 per cent since December on expectations of a takeover, was down 7.4 per cent, or US$4.75, at US$59.60 after news that the acquisition would be at a discount to Unocal's closing price on Friday. ChevronTexaco declined US$2.33, or 4 per cent, to US$56.98.

Fannie Mae tumbled 3 per cent, or US$1.78, to US$51.46, on news of a broadening investigation into accounting problems at the home financing company.

Overall, trading was active, with 1.64 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.63 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year. Advancers and decliners were roughly even on the New York Stock Exchange, while decliners outnumbered advancers by about 8 to 7 on Nasdaq.

- REUTERS