A global stock rally is raising spirits that the economy could make a few more wining laps in the closing days of the third quarter. Big merger deals on both sides of the Atlantic spurred buying sprees yesterday in world capitals for a wide range of blue- chip stocks. The Dow Jones industrial average jumped more than 124 points for its biggest gain in more than a month and recovered most of what it lost last week. Stocks in the UK, Germany and France posted even larger gains of more than 2 percent. Analysts said mergers announced yesterday by Abbott Labs and Xerox added to the recent deal fever ignited by Kraft's interest in buying Cadbury for $16.7 billion and Dell's $3.9 billlion takeover of Perot Systems. Abbott is spending $6.6 billion for Belgian chemical firm Solvay, and Xerox intends to pay $6.4 billion for Affiliated Computer Services. "It's encouraging to all investors when you see companies buy because basically what that says is they're in a more aggressive mode as opposed to being in the fetal position," said Mark Coffelt of Empiric Funds. The Dow rose 124.17, or 1.3 percent, to 9,789.36, pushing it closer to the 10,000-point level. The S&P 500 index rose 18.60, or 1.8 percent, to 1,062.98, and the Nasdaq gained 1.9 percent to 2,130.74, up 39.82. Trading was light across the board. But the end of the third quarter tomorrow could bring new volatility as fund managers adjust their portfolios to shed losing stocks that drag results. Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 3.28 percent from 3.32 percent late Friday. The dollar jumped to $1.4565 against the euro, but slipped to 89 yen for the first time since February. Gold rose $2.50, or 0.3 percent, to $994.10 an ounce here.

Originally published by PAUL THARP.

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