US stocks: Markets rise as crude oil eases

NEW YORK - US stocks edged up on Monday, gaining ground after 3 weeks of losses, as a drop in crude oil eased concern that high energy prices will cut into profits and a 2.5 per cent gain in insurer American International Group Inc. propped up the Dow.

Brokerage Merrill Lynch said in a research note that it continued to be a buyer of AIG's stock, which rose US$1.41 to US$57.02 on the New York Stock Exchange.

Merrill said the filing of the insurer's 10-K report with the Securities and Exchange Commission -- expected on Thursday -- could be a catalyst for the shares by helping reduce uncertainty surrounding the company's accounting, which is under scrutiny by federal and state authorities.

A deal for financial technology company SunGard Data Systems Inc. raised hopes of more deals to come.

SunGard, an S&P 500 constituent, rose nearly 9 per cent to US$34.36 after a group of private equity investment firms agreed to buy the company for about US$10.8 billion plus the assumption of debt.

The blue-chip Dow Jones industrial average was up 42.78 points, or 0.41 per cent, at 10,485.65 and the broader Standard & Poor's 500 Index was up 2.86 points, or 0.24 per cent, at 1,174.28. The tech-heavy Nasdaq Composite Index edged up 1.46 points, or 0.07 per cent, at 1,992.52.

"I think the market had entered into a situation where it was oversold, and when that happens all news is good news," Les Seff, chief operating officer and managing director of capital markets at BrokerageAmerica, said. "Coupled with the fact that oil did come off a bit, the good news is even better news. "

Trading was light, with 1.3 billion shares changing hands on the NYSE, below the 1.46 billion daily average for last year. About 1.5 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

The number of declining shares outnumbered those rising by 6-to-5 on the NYSE and by about 8-to-7 on Nasdaq.

NYMEX crude for May delivery settled at US$54.05 a barrel, down 79 cents. Prices set a record at US$57.60 on March 17.

The dollar rallied, hitting six-week highs against the euro, Swiss franc and sterling. A stronger US currency attracts foreign investors to dollar-denominated assets, lowers inflationary pressure and could make it less likely the Federal Reserve will step up the pace of interest-rate increases.

Equity markets fell last week as a bigger-than-expected rise in an inflation gauge stoked worries about more aggressive interest-rate hikes ahead.

Movie rental chain Blockbuster Inc. dropped its hostile bid for Hollywood Entertainment Corp., clearing the way for a bid from rival Movie Gallery Inc.. Movie Gallery shares soared 22 per cent to US$29.45 and Hollywood Entertainment fell nearly 7 per cent to US$13.20.

Shares of AmerisourceBergen fell 11.6 per cent to US$54.03 after the drug wholesaler gave a disappointing earnings forecast through 2006. The outlook also hit shares of rivals. McKesson Corp. fell 5 per cent to US$36.16 and Cardinal Health was off nearly 6 per cent to US$53.78.

By contrast, shares of luxury jeweler Tiffany & Co. jumped after an investor said in a Barron's article that the shares could rise 25 per cent or more if the company can solve its problems or is acquired. The stock was up 5 per cent at US$34.35.

- REUTERS