- The Washington Times - Tuesday, February 13, 2007

NEW YORK (AP) — Wall Street stocks surged yesterday, pushing up the Dow Jones industrials by more than 100 points as a report that two companies are trying to buy Alcoa Inc. stoked investors’ hopes for a pickup in takeover activity.

Australian mining companies BHP Billiton Ltd. and Rio Tinto PLC are each planning to offer $40 billion for the aluminum producer, according to the Times of London.

The report came amid Hindalco Industries Ltd.’s $3.6 billion offer to buy Canadian aluminum maker Novelis Inc., and drugstore operator CVS Corp.’s move to bump up the value of its proposed purchase of Caremark Rx Inc.

The flurry of takeover-related news suggested that the global economy has some muscle. Investors also were encouraged by rebounding oil prices, an upgrade of General Motors Corp., and a stock buyback by 3M.

Analysts cautioned that yesterday’s rally followed three straight days of drops in the Dow, and that recent earnings reports have been mixed. Furthermore, Federal Reserve Chairman Ben S. Bernanke could hint in his testimony to Congress today that rising inflation might compel policy-makers to raise interest rates.

“The optimists are lifting their heads today despite all the pessimism in the market right now,” said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis. “They’re making the bet that his comments will be benign, rather than scary and hawkish.”

The Dow climbed 102.30, or 0.81 percent, to 12,654.85. It was the biggest one-day jump since Dec. 27.

Broader stock indicators also rose. The Standard & Poor’s 500 index increased 10.89, or 0.76 percent, to 1,444.26, and the Nasdaq Composite Index rose 9.50, or 0.39 percent, to 2,459.88. The metals and mining sector was boosted by the report on Alcoa, which rose $2.09, or 6.4 percent, to $34.99, while rival Alcan Inc. rose $2.58, or 4.9 percent, to $54.77.

In other signs that merger-and-acquisition activity is quickening, restaurant chain Applebee’s International Inc. said it is looking into a possible sale of the company, while CVS boosted the value of its proposed acquisition of Caremark.

Applebee’s rose $2.09, or 8.6 percent, to $26.32.

Caremark, which is being pursued by Express Scripts Inc., rose $1.92, or 3.2 percent, to $62.83.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.64 billion shares, compared with 2.82 billion Monday.

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