U.S. Stocks, Euro Gain, Treasuries Drop on M&A, Stress Tests

Blommberg,

U.S. stocks rallied, sending benchmark indexes to one-month highs, after Genzyme Corp. received a takeover approach and General Electric Co. boosted its dividend. The euro appreciated after 84 of 91 European banks passed stress tests. Treasuries dropped.

The Standard & Poor’s 500 Index climbed 0.8 percent to 1,102.66 at 4 p.m. in New York, its first gain above 1,100 since June 22. Genzyme, the largest maker of medicines for genetic diseases, surged 15 percent and GE rose 3.3 percent. The euro strengthened above $1.29 after dropping 0.8 percent earlier. The 10-year Treasury yield increased five basis points to 2.99 percent. Copper rose for a fifth day, capping its best weekly gain since February, while oil fell from an 11-week high.

The S&P 500 drifted between gains and losses for most of the day before early afternoon reports that Sanofi-Aventis SA made a takeover approach for Genzyme bolstered optimism that a rebound in mergers and acquisitions is accelerating. GE helped the Dow Jones Industrial Average briefly erase its 2010 loss after lifting its payout by 20 percent.

“Companies are sitting on records amount of cash which are they either returning to shareholders or using for consolidation,” said Frank Ingarra, a Stamford, Connecticut- based money manager at Hennessy Advisors Inc., which oversees about $800 million. “The GE dividend news was positive and industry consolidation is good for shareholders.” (more)