Stocks closed mostly higher Monday, recouping part of last week's losses, as investors shook off some recent corporate profit warnings and focused on takeover news.
In currency trading the yen hit a three-year low against the dollar after comments from a key Japanese official suggested the government is content to see the currency weaken further.
In the Treasury bond market, yields soared in afternoon trading, then tumbled by the end of the session as buyers swarmed.
On Wall Street, the Nasdaq composite index rose 34.28 points, or 1.8%, to 1,987.45, boosted by biotechnology shares after Amgen and Immunex confirmed their merger plans. Nasdaq had fallen 68 points last week.
The Dow Jones industrials added 80.82 points, or 0.8%, to 9,891.97 on Monday, after falling 238 points last week.
Winners topped losers by 21 to 16 on Nasdaq and by 18 to 14 on the New York Stock Exchange in moderate trading.
Merger deals such as Amgen's bid for Immunex and Vivendi Universal's offer for USA Networks' entertainment assets received a warmer reception from investors Monday, after some skepticism last week.
Amgen jumped $3.46 to $59.49, helping to stoke a broad rally in biotech. Immunex surged $3.44 to $29.06.
Vivendi's U.S.-traded shares gained $3.15 to $52.10. They had dropped $4.42 last week as rumors of the deal with USA Networks first surfaced.
Some investors are thinking that "if corporate managers think stocks are cheap, maybe we ought to be buying," said Charles G. Crane, strategist for Victory SBSF Capital Management.
In another bid, Carnival Cruise made a hostile takeover offer for P&O Princess Cruises, driving Princess shares up $1.19 to $21.23.
Profit-taking had weighed on the stock market last week amid a flurry of earnings warnings from companies including drug giant Merck, telecom-equipment firms Lucent Technologies and Ciena, and American Express.
But on Monday buyers took control early in the session and the market built on its gains in the afternoon.
Buyers also jumped into the Treasury market in the afternoon, after another wave of heavy selling pushed long-term Treasury yields to levels last seen in early summer.
The 10-year T-note yield rose as high as 5.36%, up from 5.19% Friday and the highest since early July. A surge of buying then pushed the yield back down to 5.19% by the close.
The market sold off to a certain point where "people come in and pick up value," said Frank Waung, an economist at Societe Generale.
Treasury yields have been rising in recent weeks, in part reflecting expectations of a U.S. economic rebound in 2002. But Treasuries also have suffered as investors have dumped those securities in favor of higher-yielding corporate bonds.
In currency trading the yen ended at 127.52 per dollar in New York, the weakest level since 1998. Bloomberg News reported that Vice Finance Minister Haruhiko Kuroda said that, despite the yen's slide, it is still "too strong" given the Japanese economy's woes.
His comments are giving traders "the green light to sell the yen," said Alex Beuzelin, a currency analyst at Ruesch International in Washington. A weaker yen makes Japanese exports cheaper abroad, and thus could boost the country's economy.
Among Monday's highlights:
* In the biotech sector Biogen gained $1.46 to $57.92, Genentech rose $2.21 to $55.01 and Idec Pharmaceuticals jumped $3.29 to $70.99.
* Microsoft led tech shares higher, rising $1.54 to $68.98, the highest since July. Other tech gainers included Intel, up 70 cents to $33.97; KLA Tencor, up $2.65 to $55.50; and Autodesk, up $1.16 to $39.95.
* European markets rose sharply, led by tech and telecom stocks. Germany's DAX index jumped 3.2% and the French CAC index rose 3.3%.
Mexican stocks also powered higher, with the IPC index rising 2.2% to 6,271.49, the highest since August.
* Utility stocks remained a weak spot on Wall Street. The Dow utility index eased 1% to 275.25, just above the 52-week low set last week.